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FD

FIDELITY D & D BANCORP INC (FDBC)·Q2 2025 Earnings Summary

Executive Summary

  • EPS and profitability accelerated: diluted EPS rose to $1.20 (+40% y/y from $0.86; +16% q/q from $1.03) as net income increased to $6.9 million (+40% y/y; +15% q/q) .
  • Net interest margin expanded: FTE NIM improved to 2.92% (from 2.89% in Q1 and 2.71% in Q2 2024), with FTE spread up to 2.25% (from 2.24% in Q1 and 2.00% in Q2 2024), driven by loan growth and higher yields .
  • Balance sheet and credit quality strengthened: non‑performing assets fell to 0.13% of total assets (from 0.23% in Q1 and 0.30% at year‑end), while insured/collateralized deposits approximated 75% of total deposits; tangible book value per share increased to $34.25 .
  • Dividend maintained: Board declared a $0.40 per share Q3 2025 dividend (unchanged vs Q2 2025) .
  • Estimates context: S&P Global consensus EPS and revenue were unavailable for Q2 2025, so a formal beat/miss cannot be determined; third‑party trackers also show N/A consensus .

What Went Well and What Went Wrong

What Went Well

  • Net interest income growth: NII rose 19% y/y to $17.9 million, benefiting from $213.6 million higher average earning assets and 24 bps higher FTE loan yields; deposits growth lowered overall cost of interest‑bearing liabilities 6 bps y/y .
  • Non‑interest income uplift: up 16% y/y to $5.4 million on higher trust fees (+$0.2m), a $0.2m BOLI death benefit, loan service charges (+$0.2m), and interchange fees (+$0.1m) .
  • Management tone and execution: “we delivered another strong quarter…driven by a 19% increase in net interest income… and a 16% rise in non‑interest income,” said CEO Daniel J. Santaniello .
  • Credit trends improved: non‑performing assets to total assets dropped to 0.13% and past due/non‑accrual loans to total loans fell to 0.41% .
  • Capital and TBV accretion: shareholders’ equity rose 7% YTD to $217.9 million; tangible book value per share increased to $34.25 .

What Went Wrong

  • Expense growth: non‑interest expense increased 8% y/y to $14.7 million, led by salaries/benefits (+$0.8m), premises/equipment (+$0.2m), and advertising (+$0.2m) .
  • Higher tax provision: provision for income taxes rose $0.6 million y/y on $2.6 million higher pre‑tax income .
  • Credit provision uptick: provision for credit losses on loans increased to $300k vs $275k y/y, reflecting higher net charge‑offs and loan balances; the provision for unfunded commitments was $20k vs $140k y/y (benefit in Q1) .

Financial Results

Core P&L and Earnings (USD Millions unless noted)

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Total Revenue (NII + Non-Interest Income)$19.73 ( )$21.22 ()$22.01 ()$23.29 ()
Net Interest Income$15.12 $16.37 $17.03 $17.93
Non-Interest Income$4.62 $4.85 $4.97 $5.36
Net Income$4.94 $5.84 $5.99 $6.92
Diluted EPS ($)$0.86 $1.01 $1.03 $1.20
Net Interest Margin (FTE, %)2.71% 2.78% 2.89% 2.92%
Net Interest Spread (FTE, %)2.00% 2.08% 2.24% 2.25%
Cost of Funds (%)1.96% 2.00% 1.93% 1.95%
Efficiency Ratio (FTE, %)66.47% 65.48% 61.67% 61.17%

Notes: Total Revenue equals Net Interest Income + Non‑Interest Income, consistent with third‑party reporting conventions used for banks (components cited per documents).

Interest Income/Expense Detail (USD Millions)

Line ItemQ2 2024Q4 2024Q1 2025Q2 2025
Loans & Leases Interest Income$22.52 $24.58 $24.60 $25.33
Securities & Other Interest Income$3.52 $3.48 $3.71 $4.44
Total Interest Income$26.04 $28.06 $28.31 $29.77
Deposits Interest Expense$(10.46) $(11.47) $(11.19) $(11.74)
Borrowings & Debt Interest Expense$(0.46) $(0.22) $(0.09) $(0.10)
Total Interest Expense$(10.92) $(11.69) $(11.28) $(11.84)

KPIs and Balance Sheet Ratios

KPIQ2 2024Q4 2024Q1 2025Q2 2025
Assets Under Management ($000s)$906,861 $921,994 $955,647 $1,030,268
Book Value per Share ($)$34.12 $35.56 $36.70 $37.78
Tangible Book Value per Share ($)$30.52 $31.98 $33.16 $34.25
Equity to Assets (%)7.83 7.89 7.81 8.08
NPA / Total Assets (%)0.28 0.30 0.23 0.13
Non‑accrual Loans / Total Loans (%)0.40 0.41 0.33 0.17
ROAA (%)0.81 0.90 0.93 1.04
ROAE (%)10.44 11.26 11.66 13.02

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per Share ($)Q3 2025$0.40 (Q2 2025 actual) $0.40 declared Maintained

No quantitative revenue, margin, OpEx, OI&E, or tax rate guidance was provided in the company’s Q2 materials; capital ratios remained “well capitalized” (Tier 1 leverage 9.16%) as a status disclosure rather than forward guidance .

Earnings Call Themes & Trends

Note: No Q2 2025 call transcript was available; themes reflect management disclosures in press releases and 8‑K.

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Net Interest Margin & SpreadNIM 2.78%, spread 2.08% (Q4); NIM 2.89%, spread 2.24% (Q1) NIM 2.92%, spread 2.25% Improving
Deposit Strategy & MixQ1: +$116.6m deposits; checking >50% of total; insured/collateralized ≈75% YTD deposits +$94.5m; insured/collateralized ≈75%; targeted marketing and rate management Stable to improving
Asset QualityQ4 NPA 0.30%, non‑accrual/loans 0.41%; Q1 NPA 0.23%, non‑accrual 0.33% NPA 0.13%, non‑accrual 0.17% Improving
Non‑Interest Income DriversQ1: wealth mgmt +$0.2m; interchange +$0.1m; securities loss $0.8m in Q1 offset by gains Trust fees +$0.2m; BOLI +$0.2m; loan service charges +$0.2m; interchange +$0.1m Diversified, steady growth
Operating ExpensesQ4/Q1: rising salaries/benefits, professional/data center, advertising +8% y/y; salaries/benefits +$0.8m; premises/equipment +$0.2m; advertising +$0.2m Elevated but managed
Capital & TBVTBV $31.98 (Q4) → $33.16 (Q1) TBV $34.25; equity up 7% YTD Accretive

Management Commentary

  • “Second quarter 2025 net income increased 40% over last year’s second quarter to $6.9 million… driven by a 19% increase in net interest income… and a 16% rise in non‑interest income.” — Daniel J. Santaniello, President & CEO .
  • “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.” — Daniel J. Santaniello .
  • Q1 context: “strong net income primarily driven by accelerated loan and deposit growth and improvement in net interest margin… outlook for the year is positive,” — CEO .

Non‑GAAP framework: The company uses FTE adjustments for yields/margins and reports efficiency ratio on an FTE‑adjusted basis; reconciliations provided in exhibits .

Q&A Highlights

  • No Q2 2025 earnings call transcript was available at the time of this analysis; MarketBeat lists a call event but shows no consensus figures, indicating limited sell‑side coverage .
  • Clarifications in press materials highlight drivers of NII (loan balances and yields), deposit growth initiatives, and expense components .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q2 2025 were unavailable; therefore, beat/miss vs consensus cannot be assessed. Third‑party trackers similarly display “N/A” for consensus .
  • Reported revenue proxy (NII + non‑interest income) from S&P Global actuals: $23.28 million* for Q2 2025 (matches company‑reported components), with no consensus provided*.
  • With NIM expansion, stronger credit quality, and TBV accretion, sell‑side models (where present) may focus on sustained margin trajectory and operating leverage; absent formal guidance, updates will likely hinge on deposit pricing dynamics and loan growth disclosures .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Margin momentum: FTE NIM rose to 2.92% and spread to 2.25%; continued loan growth and yield discipline supported core earnings .
  • Operating leverage improving: efficiency ratio fell to 61.17% from 66.47% y/y and 61.67% in Q1, as revenue growth outpaced expense growth .
  • Credit risk trending favorable: NPA ratio dropped to 0.13% and non‑accruals to 0.17% of loans; allowance to total loans held ~1.09% .
  • Deposit strategy effective: insured/collateralized deposits ≈75%; relationship banking and targeted marketing continue to add funding stability .
  • Capital strength and TBV accretion: tangible book value per share increased to $34.25, with risk‑based capital ratios well above minimums (Total RBC 14.72%) .
  • Dividend continuity: $0.40/share declared for Q3 2025, consistent with prior quarter; supports income investors while capital builds .
  • Focus areas for next quarter: watch expense trajectory (salaries/benefits, tech/premises) and deposit pricing versus margin gains; asset quality metrics remain a key support to valuation .