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FIDELITY D & D BANCORP INC (FDBC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered improved profitability and margin: net income $5.84M and diluted EPS $1.01, with FTE net interest margin expanding to 2.78% (+8–12 bps vs Q3/Q2) as asset yields rose faster than funding costs .
  • Year-end balance sheet showed robust loan and deposit growth: loans $1.80B (+$114.3M YoY) and total deposits $2.34B (+$182.4M YoY), while Tier 1 leverage remained strong at 9.22% .
  • Dividend trajectory sustained: Q4 2024 cash dividend increased 5% to $0.40 per share; Q1 2025 declared at $0.40, up 5% year over year, reinforcing capital return and confidence .
  • Street consensus was unavailable at time of retrieval, so beats/misses vs estimates cannot be assessed; the quarter’s “surprise” largely reflects the absence of last year’s Q4 2023 securities loss that depressed prior-year non-interest income .

What Went Well and What Went Wrong

What Went Well

  • Margin improvement: FTE net interest margin rose to 2.78% (Q4) from 2.70% (Q3) and 2.71% (Q2); FTE spread increased to 2.08% vs 1.98% (Q3) as asset yields outpaced liability costs .
  • Broad-based growth: loans and leases reached $1.80B; deposits grew to $2.34B, enabling short‑term borrowing paydown and supporting earning asset expansion .
  • Management tone/confidence: “Strong deposit and lending growth… position us for a strong 2025,” underscoring strategy execution and positive credit trends (CEO) .

What Went Wrong

  • Operating expense pressure: Q4 non‑interest expense rose 12% YoY to $14.4M, driven by higher salaries and incentives, professional services, and data center costs .
  • Asset quality mix: non‑performing assets increased to 0.30% of total assets vs 0.13% last year; non‑accrual loans to total loans ticked to 0.41% vs 0.20% last year .
  • Funding costs: cost of interest‑bearing liabilities rose to 2.60% (Q4) and cost of funds to 2.00%, reflecting competitive rate environment and promotional deposits .

Financial Results

Metric (USD)Q2 2024Q3 2024Q4 2024
Net Interest Income ($MM)$15.12 $15.43 $16.37
Non-interest Income ($MM)$4.62 $4.98 $4.85
Non-interest Expense ($MM)$(13.62) $(13.84) $(14.40)
Provision for Credit Losses on Loans ($MM)$(0.28) $(0.68) $(0.25)
Net Benefit (Provision) – Unfunded Commitments ($MM)$(0.14) $(0.14) $0.09
Pre-tax Income ($MM)$5.70 $5.76 $6.66
Income Tax (Provision) Benefit ($MM)$(0.77) $(0.79) $(0.83)
Net Income ($MM)$4.94 $4.97 $5.84
Diluted EPS ($)$0.86 $0.86 $1.01
Key Margins/ReturnsQ2 2024Q3 2024Q4 2024
FTE Yield on Interest-earning Assets (%)4.58% 4.68% 4.68%
Cost of Interest-bearing Liabilities (%)2.58% 2.70% 2.60%
Cost of Funds (%)1.96% 2.08% 2.00%
Net Interest Spread (FTE) (%)2.00% 1.98% 2.08%
Net Interest Margin (FTE) (%)2.71% 2.70% 2.78%
ROAA (%)0.81% 0.79% 0.90%
ROAE (%)10.44% 9.89% 11.26%
Efficiency Ratio (FTE) (%)66.47% 65.33% 65.48%
Balance Sheet & Credit KPIsQ2 2024Q3 2024Q4 2024
Total Assets ($B)$2.50 $2.62 $2.58
Loans & Leases ($B)$1.73 $1.80 $1.80
Total Deposits ($B)$2.17 $2.34 $2.34
NPA / Total Assets (%)0.28% 0.29% 0.30%
Non-accrual Loans / Total Loans (%)0.40% 0.39% 0.41%
Allowance for Credit Losses / Loans (%)1.10% 1.09% 1.09%
Tier 1 Leverage Ratio (%)9.30% 9.30% 9.22%

Note: Prior-year Q4 2023 was depressed by a $6.5M securities loss (non-interest income), creating a favorable YoY comp in Q4 2024 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ4 2024$0.38 $0.40 Raised
Dividend per shareQ1 2025$0.38 (Q1 2024) $0.40 (+5% YoY) Raised
Revenue/Margins/OpEx/TaxFY/Q4 2024N/ANo formal quantitative guidance providedMaintained: no guidance

Earnings Call Themes & Trends

No Q4 2024 earnings call transcript was available; themes reflect management’s press releases.

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Net Interest MarginNIM 2.71%; margin compression stabilizing; asset yields +46 bps; liabilities cost +74 bps NIM 2.70%; improved 7 bps YoY; asset yields +50 bps; liabilities cost +53 bps NIM 2.78%; spread up; asset yields +32 bps vs liabilities +24 bps Improving
Deposit Mix & Funding CostsPromo CDs used to offset transactional declines; cost of funds 1.96% Continued promotional rates; cost of funds 2.08% Money market/time deposits up; cost of funds 2.00%; insured/collateralized deposits ~76% Mixed but stabilizing costs
Loan GrowthLoans +$42M H1; FTE loan yield +46 bps; growth moderated Loans +$107.9M YTD; FTE loan yield +50 bps Loans +$114.3M YoY; average balances rose; FTE loan yield +37 bps Steady growth
Credit QualityNPA 0.28%; NAL/TL 0.40% NPA 0.29%; NAL/TL 0.39% NPA 0.30%; NAL/TL 0.41%; provision modest Slightly weaker mix
Capital & TBVLeverage 9.30%; TBV $30.52 Leverage 9.30%; TBV $32.55 Leverage 9.22%; TBV $31.98; CET1 13.60% Strong
Dividends$0.38 declared; consistent Announced increase to $0.40 in Q4 Executed $0.40 in Q4; Q1 2025 $0.40 (+5% YoY) Positive

Management Commentary

  • “We are pleased to post solid performance in Q4… Strong deposit and lending growth, along with positive balance sheet trends and credit metrics contributed to… $2.6B assets and $20.8M net income… positioning us for a strong 2025.” — Dan Santaniello, President & CEO .
  • Q3 tone: “Strong balance sheet growth, increased capital levels, liquidity, and non-interest income… net interest margin increased.” — Daniel J. Santaniello .
  • Q2 tone: “Prudent balance sheet management and expense discipline… ongoing inverted yield curve continues to compress net interest margin, with early signs of stabilization.” — Daniel J. Santaniello .

Q&A Highlights

  • No Q4 2024 earnings call transcript found; therefore, Q&A themes and clarifications are unavailable [listings show no transcript] [ListDocuments earnings-call-transcript: 0].

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue could not be retrieved due to SPGI daily limit errors; as a result, we cannot assess beats/misses vs Street in this recap [SPGI error from GetEstimates].
  • Investors should monitor subsequent availability of estimates to calibrate model assumptions for NIM, funding costs, and non‑interest income ranges (particularly given prior-year securities loss impact) .

Key Takeaways for Investors

  • Margin inflection is material: NIM rose to 2.78% with spread improvement, suggesting pricing power and asset mix are outpacing funding cost pressures into year‑end .
  • Growth backed by funding: deposits increased $182.4M YoY and supported loan growth of $114.3M, reducing reliance on short-term borrowings—constructive for net interest income durability .
  • Expense vigilance required: headline efficiency ratio (~65–66%) held stable, but the 12% YoY increase in Q4 operating expense warrants tracking against revenue growth to preserve PPNR momentum .
  • Credit quality is sound but watch list expanding: low net charge-offs (0.03%) and robust reserves are offset by rising NPAs/NAL ratios; sensitivity to commercial credit cycles should be monitored .
  • Capital returns signal confidence: dividend raised to $0.40 in Q4 and maintained into Q1 2025 (+5% YoY), consistent with strong CET1/Leverage metrics .
  • 2025 setup: Management’s constructive tone plus NIM tailwinds and loan/deposit growth support near‑term earnings resilience; competitive rate dynamics and expense trajectory are key swing factors .
  • Actionable: Favor near‑term on margin momentum and capital strength; reassess if funding costs re‑accelerate or NPAs elevate meaningfully, given the competitive deposit environment .