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What changed in FIDELITY D & D BANCORP INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FIDELITY D & D BANCORP INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+273 added−288 removedSource: 10-K (2026-03-13) vs 10-K (2025-03-13)

Top changes in FIDELITY D & D BANCORP INC's 2025 10-K

273 paragraphs added · 288 removed · 228 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

8 edited+0 added−0 removed33 unchanged
Biggest changeHuman Capital Mission and Core Values Mission: We are Fidelity Bank. We are passionate about success and committed to building strong relationships through exceptional experiences. We will be the best bank for our bankers to work, our clients to bank, our shareholders to invest and for our community to prosper.
Biggest changeHuman Capital Mission and Core Values Mission: We are passionate about building strong relationships through superior client experiences. For us, success means being the best place for our bankers to work, our clients to bank, our shareholders to invest in, and our community to prosper.
Collectively, they have assisted in the development of the Core Values: ● Relationships ● Integrity ● Commitment ● Passion ● Innovation ● Success Culturally, the Fidelity Model Experience provides a strategic vision to build a performance-based corporation. It guides all bankers on solidifying internal and external relationships and becoming the Trusted Financial Advisor for clients.
Collectively, they have assisted in the development of the Core Values: ● Relationships ● Integrity ● Passion & Commitment ● Innovation ● Success Culturally, the Fidelity Model Experience provides a strategic vision to build a performance-based corporation. It guides all bankers on solidifying internal and external relationships and becoming the Trusted Financial Advisor for clients.
Health and Wellness The Company provides a strong health benefit package to bankers, including medical, dental and vision insurances, life insurance, long- and short-term disability coverage and flexible spending accounts. Packages include options to cover family members according to established guidelines, creating a focus on caring for both the personal and professional needs of the banker.
Health and Wellness The Company provides a strong health benefit package to bankers, including medical, dental and vision insurances, term and whole-life insurances, long- and short-term disability coverage and flexible spending accounts. Packages include options to cover family members according to established guidelines, creating a focus on caring for both the personal and professional needs of the banker.
A full list of services provided by the Bank is detailed in the section entitled “Products and Services” contained within the 2024 Annual Report to Shareholders, incorporated by reference.
A full list of services provided by the Bank is detailed in the section entitled “Products and Services” contained within the 2025 Annual Report to Shareholders, incorporated by reference.
Economic conditions affect the market value of the underlying collateral as well as the levels of adequate cash flow and revenue generation from income-producing commercial properties. 4 Table of Contents During 2024, the national unemployment rate rose to 4.1% compared to 3.7% at the end of 2023.
Economic conditions affect the market value of the underlying collateral as well as the levels of adequate cash flow and revenue generation from income-producing commercial properties. 4 Table of Contents During 2025, the national unemployment rate rose to 4.4% compared to 4.1% at the end of 2024.
The unemployment rates in the Company’s local statistical markets, Scranton-Wilkes-Barre-Hazleton and Allentown-Bethlehem-Easton, increased to 3.8% and 3.4%, respectively, from 3.5% and 3.3%, respectively, at the end of 2023. The local economy has been volatile in recent years and generally lags the national market trends.
The unemployment rates in the Company’s local statistical markets, Scranton-Wilkes-Barre-Hazleton and Allentown-Bethlehem-Easton, increased to 4.3% and 3.9%, respectively, from 3.8% and 3.4%, respectively, at the end of 2024. The local economy has been volatile in recent years and generally lags the national market trends.
Demographics As of December 31, 2024, the Company employed 320 bankers within its network located in Northeast and Lehigh Valley, Pennsylvania. The Company employed 31 part-time bankers and 289 full-time bankers. Employment levels are aligned with the needs of the business.
Demographics As of December 31, 2025, the Company employed 324 bankers within its network located in Northeast and Lehigh Valley, Pennsylvania. The Company employed 26 part-time bankers and 298 full-time bankers. Employment levels are aligned with the needs of the business.
As of June 30, 2024, the Company had 15.70% of Lackawanna County’s total deposit market share ranking 2nd in total deposits, 6.14% of Luzerne County’s total deposit market share ranking 8 th in total deposits, and 7.12% of Northampton County’s total deposit market share ranking 6 th in total deposits.
As of June 30, 2025, the Company had 17.30% of Lackawanna County’s total deposit market share ranking 3rd in total deposits, 7.24% of Luzerne County’s total deposit market share ranking 8 th in total deposits, and 7.21% of Northampton County’s total deposit market share ranking 6 th in total deposits.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe ability of the bank to pay dividends is also subject to profitability, financial condition, regulatory capital requirements, capital expenditures and other cash flow requirements. There is no assurance that the bank will be able to pay dividends in the future or that the Company will generate cash flow to pay dividends in the future.
Biggest changeThere is no assurance that the bank will be able to pay dividends in the future or that the Company will generate cash flow to pay dividends in the future. The Company’s failure to pay dividends on its common stock may have a material adverse effect on the market price of its common stock.
Although it is difficult to predict with certainty the magnitude and extend of these effects at this time, we believe compliance with Dodd-Frank, its interpretive regulations, rules, and initiatives will negatively impact revenue and increase the cost of doing business.
Although it is difficult to predict with certainty the magnitude and extent of these effects at this time, we believe compliance with Dodd-Frank, its interpretive regulations, rules, and initiatives will negatively impact revenue and increase the cost of doing business.
The Company’s stock price can fluctuate significantly in response to a variety of factors including, among other things: ● Actual or anticipated variations in quarterly results of operations. ● Recommendations by securities analysts. ● Operating and stock price performance of other companies that investors deem comparable to the Company. ● News reports relating to trends, concerns and other issues in the financial services industry. ● Perceptions in the marketplace regarding the Company and/or its competitors. ● New technology used, or services offered, by competitors. ● Significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors. ● Failure to integrate acquisitions or realize anticipated benefits from acquisitions. ● Changes in government regulations. ● Geopolitical conditions such as acts or threats of terrorism or military conflicts.
The Company’s stock price can fluctuate significantly in response to a variety of factors including, among other things: ● Actual or anticipated variations in quarterly results of operations. ● Recommendations by securities analysts. ● Operating and stock price performance of other companies that investors deem comparable to the Company. ● News reports relating to trends, concerns and other issues in the financial services industry. ● Perceptions in the marketplace regarding the Company and/or its competitors. ● New technology used, or services offered, by competitors. ● Significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors. ● Failure to integrate acquisitions or realize anticipated benefits from acquisitions. ● Changes in government regulations. ● Geopolitical conditions such as acts or threats of terrorism, civil unrest, hostilities, military deployment, military conflicts, or war.
The Company continually encounters technological change. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs.
Additionally, the inability to raise capital in sufficient amounts may adversely affect the Company’s operations, financial condition and results of operations. The Company is subject to environmental liability risk associated with lending activities. A significant portion of the Company’s loan portfolio is secured by real property.
Additionally, the inability to raise capital in sufficient amounts may adversely affect the Company’s operations, financial condition and results of operations. 8 Table of Contents The Company is subject to environmental liability risk associated with lending activities. A significant portion of the Company’s loan portfolio is secured by real property.
The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on the Company’s financial condition and results of operations. 15 Table of Contents A protracted government shutdown or issues relating to debt and the deficit may adversely affect the Company.
The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on the Company’s financial condition and results of operations. A protracted government shutdown or issues relating to debt and the deficit may adversely affect the Company.
Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on the Company’s business and, in turn, the Company’s financial condition and results of operations. Consumers may decide not to use banks to complete their financial transactions.
Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on the Company’s business and, in turn, the Company’s financial condition and results of operations. 14 Table of Contents Consumers may decide not to use banks to complete their financial transactions.
Any failure or circumvention of the Company’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Company’s business, results of operations and financial condition. New lines of business or new products and services may subject the Company to additional risks.
Any failure or circumvention of the Company’s controls and procedures or failure to comply with regulations related to controls and procedures could have a material adverse effect on the Company’s business, results of operations and financial condition. 9 Table of Contents New lines of business or new products and services may subject the Company to additional risks.
The differences in resources and regulations may make it more difficult for the Company to compete profitably, reduce the rates that it can earn on loans and on its investments, increase the rates it must offer on deposits and other funds, and adversely affect its overall financial condition and earnings. 9 Table of Contents The Company is subject to extensive government regulation and supervision.
The differences in resources and regulations may make it more difficult for the Company to compete profitably, reduce the rates that it can earn on loans and on its investments, increase the rates it must offer on deposits and other funds, and adversely affect its overall financial condition and earnings. The Company is subject to extensive government regulation and supervision.
Given the lower trading volume of the Company’s common stock, significant sales of the Company’s common stock, or the expectation of these sales, could cause the Company’s stock price to fall. Furthermore, from time to time, the Company’s common stock may be included in certain and various stock market indices.
Given the lower trading volume of the Company’s common stock, significant sales of the Company’s common stock, or the expectation of these sales, could cause the Company’s stock price to fall. 13 Table of Contents Furthermore, from time to time, the Company’s common stock may be included in certain and various stock market indices.
The rating agencies, due to constraints related to the rating of the United States, also placed government-sponsored enterprises in which the Company invests and receives lines of credit on negative watch and a downgrade of the United States government's credit rating would trigger a similar downgrade in the credit rating of these government-sponsored enterprises.
The rating agencies, due to constraints related to the rating of the United States, also placed government-sponsored enterprises in which the Company invests and receives lines of credit on a stable outlook and a downgrade of the United States government's credit rating would trigger a similar downgrade in the credit rating of these government-sponsored enterprises.
The occurrence of any failures, interruptions or security breaches of the Company’s information systems could damage the Company’s reputation, result in a loss of customer business, subject the Company to additional regulatory scrutiny, or expose the Company to civil litigation and possible financial liability, any of which could have a material adverse effect on the Company’s financial condition and results of operations.
The occurrence of any failures, interruptions or security breaches of the Company’s information systems could damage the Company’s reputation, result in a loss of customer business, subject the Company to additional regulatory scrutiny, or expose the Company to civil litigation and possible financial liability, any of which could have a material adverse effect on the Company’s financial condition and results of operations. 10 Table of Contents The Company continually encounters technological change.
The Company is subject to claims and litigation pertaining to fiduciary responsibility. From time-to-time, customers make claims and take legal action pertaining to the Company’s performance of its fiduciary responsibilities.
From time-to-time, customers make claims and take legal action pertaining to the Company’s performance of its fiduciary responsibilities.
Furthermore, its use of Generative AI and other forms of AI may expose us to risks relating to intellectual property ownership and licensing rights, including copyright of Generative AI and other AI output as these issues have not been fully interpreted by federal courts or been fully addressed by federal or state legislation or regulations.
Furthermore, its use of Generative AI and other forms of AI may expose us to risks relating to intellectual property ownership and licensing rights, including copyright of Generative AI and other AI output as these issues have not been fully interpreted by federal courts or been fully addressed by federal or state legislation or regulations. 11 Table of Contents The Company is subject to claims and litigation pertaining to fiduciary responsibility.
Even with attempts to diversify the reliance upon any one third-party, the Company may not be able to mitigate the risk of its vendors’ use of common service providers.
The Company is also exposed to the risk of a disruption at a common service provider used by its third-party service providers. Even with attempts to diversify the reliance upon any one third-party, the Company may not be able to mitigate the risk of its vendors’ use of common service providers.
Further, the Company’s inclusion in indices may be weighted based on the size of its market capitalization, so even if the Company’s market capitalization remains above the amount required to be included on these indices, if its market capitalization is below the amount it was on the most recent reconstitution date, the Company’s common stock could be weighted at a lower level, holders attempting to track the composition of these indices will be required to sell the Company’s common stock to match the reweighting of the indices. 14 Table of Contents Risks Associated with the Company ’ s Industry Future governmental regulation and legislation could limit the Company ’ s future growth.
Further, the Company’s inclusion in indices may be weighted based on the size of its market capitalization, so even if the Company’s market capitalization remains above the amount required to be included on these indices, if its market capitalization is below the amount it was on the most recent reconstitution date, the Company’s common stock could be weighted at a lower level, holders attempting to track the composition of these indices will be required to sell the Company’s common stock to match the reweighting of the indices.
Additional expenses associated with compliance with the Act, currently and on an ongoing basis, are likely to continue and the effects of full implementation of the Act may limit our ability to pursue certain business opportunities.
Additional expenses associated with compliance with the Act, currently and on an ongoing basis, are likely to continue and the effects of full implementation of the Act may limit our ability to pursue certain business opportunities. Changes to trade policies and tariffs can have an adverse impact on the Company’s business and its customers.
Such negative consequences could include remediation costs that may include liability for stolen assets or information and repairing system damage that may have been caused; deploying additional personnel and protection technologies, training employees, and engaging third party experts and consultants; lost revenues resulting from unauthorized use of proprietary information or the failure to retain or attract customers following an attack; litigation; and reputational damage adversely affecting customer or investor confidence. 11 Table of Contents The Company may use artificial intelligence (AI) in its business, and challenges with properly managing its use could result in disruption of our internal operations, reputational harm, competitive harm, legal liability and adversely affect our results of operations and stock price.
Such negative consequences could include remediation costs that may include liability for stolen assets or information and repairing system damage that may have been caused; deploying additional personnel and protection technologies, training employees, and engaging third party experts and consultants; lost revenues resulting from unauthorized use of proprietary information or the failure to retain or attract customers following an attack; litigation; and reputational damage adversely affecting customer or investor confidence.
The Company generally is unable to control the amount of premiums or special assessments that its subsidiary is required to pay for FDIC insurance.
The Company ’ s banking subsidiary may be required to pay higher FDIC insurance premiums or special assessments which may adversely affect its earnings. The Company generally is unable to control the amount of premiums or special assessments that its subsidiary is required to pay for FDIC insurance.
The Company is a registered bank holding company, and its subsidiary bank is a depository institution whose deposits are insured by the FDIC. As a result, the Company is subject to various regulations and examinations by various regulatory authorities.
Risks Associated with the Company ’ s Industry Future governmental regulation and legislation could limit the Company ’ s future growth. The Company is a registered bank holding company, and its subsidiary bank is a depository institution whose deposits are insured by the FDIC. As a result, the Company is subject to various regulations and examinations by various regulatory authorities.
The unexpected loss of services of one or more of the Company’s key personnel could have a material adverse impact on the Company’s business because of their skills, knowledge of the Company’s market, years of industry experience and the difficulty of promptly finding qualified replacement personnel. 10 Table of Contents The Company ’ s communications, information and technology systems may experience a failure, interruption or breach in security.
The unexpected loss of services of one or more of the Company’s key personnel could have a material adverse impact on the Company’s business because of their skills, knowledge of the Company’s market, years of industry experience and the difficulty of promptly finding qualified replacement personnel.
The harm may be immediate without affording us an opportunity for redress or correction. 13 Table of Contents Other risks associated with the use of social media include improper disclosure of proprietary information, negative comments about our business, exposure of personally identifiable information, fraud, out-of-date information, and improper use by employees and customers.
Other risks associated with the use of social media include improper disclosure of proprietary information, negative comments about our business, exposure of personally identifiable information, fraud, out-of-date information, and improper use by employees and customers.
Any one or more of these measures may impede the takeover of the Company without the approval of our board of directors and may prevent our shareholders from taking part in a transaction in which they could realize a premium over the current market price of our common stock. 12 Table of Contents The Company is a holding company and relies on dividends from its banking subsidiary for substantially all of its revenue and its ability to make dividends, distributions, and other payments.
Any one or more of these measures may impede the takeover of the Company without the approval of our board of directors and may prevent our shareholders from taking part in a transaction in which they could realize a premium over the current market price of our common stock.
If the Company and the Bank are required to maintain higher levels of capital, the Company and the Bank may have fewer opportunities to invest capital into interest-earning assets, which could limit the profitable business operations available to the Company and the Bank and adversely impact our financial condition and results of operations. 8 Table of Contents The Company may need, or be compelled, to raise additional capital in the future, but that capital may not be available when it is needed and on terms favorable to current shareholders.
If the Company and the Bank are required to maintain higher levels of capital, the Company and the Bank may have fewer opportunities to invest capital into interest-earning assets, which could limit the profitable business operations available to the Company and the Bank and adversely impact our financial condition and results of operations.
The Company relies heavily on communications, information and technology systems to conduct its business. Any failure, interruption or breach in security of these systems could result in failures or disruptions in the Company’s customer relationship management, general ledger, deposit, loan and other systems or result in corruption, loss or compromise of confidential corporate or customer data.
Any failure, interruption or breach in security of these systems could result in failures or disruptions in the Company’s customer relationship management, general ledger, deposit, loan and other systems or result in corruption, loss or compromise of confidential corporate or customer data. The risks are greater if the issue is extensive, long-lasting, or results in financial losses to its customers.
Although management has established disaster recovery policies and procedures, the occurrence of any such event could have a material adverse effect on the Company’s business, which, in turn, could have a material adverse effect on the Company’s financial condition and results of operations.
Although management has established disaster recovery policies and procedures, the occurrence of any such event could have a material adverse effect on the Company’s business, which, in turn, could have a material adverse effect on the Company’s financial condition and results of operations. 12 Table of Contents The increasing use of social media platforms presents risks and challenges and our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could materially adversely impact our business.
As a bank holding company, the Company’s ability to pay dividends depends primarily on its receipt of dividends from its subsidiary bank. Dividend payments from the bank are subject to legal and regulatory limitations, generally based on net profits and retained earnings, imposed by bank regulatory agencies.
Dividend payments from the bank are subject to legal and regulatory limitations, generally based on net profits and retained earnings, imposed by bank regulatory agencies. The ability of the bank to pay dividends is also subject to profitability, financial condition, regulatory capital requirements, capital expenditures and other cash flow requirements.
There has been a marked increase in the use of social media platforms, including weblogs (blogs), social media websites, and other forms of Internet-based communications which allow individuals access to a broad audience of consumers and other interested persons.
The use of social media platforms, including weblogs (blogs), social media websites, and other forms of Internet-based communications allows individuals access to a broad audience of consumers and other interested persons. Social media practices in the banking industry are continually evolving, which creates uncertainty and risk of noncompliance with regulations applicable to our business.
Many social media platforms immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted. Information posted on such platforms at any time may be adverse to our interests and/or may be inaccurate.
Consumers value readily available information concerning businesses and their goods and services and often act on such information without further investigation and without regard to its accuracy. Many social media platforms immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted.
The risks are greater if the issue is extensive, long-lasting, or results in financial losses to its customers. Such failures, interruptions or breaches in security may arise from events such as severe weather, acts of vandalism, telecommunications outages, human error, or cyber-attacks.
Such failures, interruptions or breaches in security may arise from events such as severe weather, acts of vandalism, telecommunications outages, human error, or cyber-attacks. These risks also arise to the extent the Company’s third-party service providers experience failures, interruptions and breaches in security.
In addition, capital levels are also determined by the Company’s management and board of directors based on capital levels that they believe are necessary to support the Company’s business operations. The Company is evaluating its present and future capital requirements and needs, is developing a comprehensive capital plan and is analyzing capital raising alternatives, methods and options.
These capital levels are determined and dictated by law, regulation and banking regulatory agencies. In addition, capital levels are also determined by the Company’s management and board of directors based on capital levels that they believe are necessary to support the Company’s business operations.
The dissemination of information online could harm our business, prospects, financial condition, and results of operations, regardless of the information’s accuracy.
Information posted on such platforms at any time may be adverse to our interests and/or may be inaccurate. The dissemination of information online could harm our business, prospects, financial condition, and results of operations, regardless of the information’s accuracy. The harm may be immediate without affording us an opportunity for redress or correction.
Federal banking regulators require the Company and Bank to maintain adequate levels of capital to support their operations. These capital levels are determined and dictated by law, regulation and banking regulatory agencies.
The Company may need, or be compelled, to raise additional capital in the future, but that capital may not be available when it is needed and on terms favorable to current shareholders. Federal banking regulators require the Company and Bank to maintain adequate levels of capital to support their operations.
Removed
These risks also arise to the extent the Company’s third-party service providers experience failures, interruptions and breaches in security. The Company is also exposed to the risk of a disruption at a common service provider used by its third-party service providers.
Added
The Company is evaluating its present and future capital requirements and needs, is developing a comprehensive capital plan and is analyzing capital raising alternatives, methods and options.
Removed
The Company’s failure to pay dividends on its common stock may have a material adverse effect on the market price of its common stock. The Company ’ s banking subsidiary may be required to pay higher FDIC insurance premiums or special assessments which may adversely affect its earnings.
Added
The Company ’ s communications, information and technology systems may experience a failure, interruption or breach in security. The Company relies heavily on communications, information and technology systems to conduct its business.
Removed
The increasing use of social media platforms presents new risks and challenges and our inability or failure to recognize, respond to and effectively manage the accelerated impact of social media could materially adversely impact our business.
Added
Further, the Company may face unknown or contingent liabilities arising from cybersecurity incidents or data breaches that previously occurred at companies it acquires. Such incidents may not have been discovered, disclosed, or if previously discovered fully-remediated before closing, and the acquired company’s representations, warranties, and indemnities may be limited in scope, duration, or recoverability.
Removed
Social media practices in the banking industry are evolving, which creates uncertainty and risk of noncompliance with regulations applicable to our business. Consumers value readily available information concerning businesses and their goods and services and often act on such information without further investigation and without regard to its accuracy.
Added
As a result, the Company could incur costs or liabilities after an acquisition relating to regulatory investigations, litigation, remediation efforts, reputational harm, or customer and partner claims, which could adversely affect its business, financial condition, and results of operations.
Added
The Company may use artificial intelligence (AI) in its business, and challenges with properly managing its use could result in disruption of our internal operations, reputational harm, competitive harm, legal liability and adversely affect our results of operations and stock price.
Added
The Company is a holding company and relies on dividends from its banking subsidiary for substantially all of its revenue and its ability to make dividends, distributions, and other payments. As a bank holding company, the Company’s ability to pay dividends depends primarily on its receipt of dividends from its subsidiary bank.
Added
Changes in trade policies, including the imposition of tariffs or the escalation of a trade war, could negatively impact the economic conditions in the markets the Company serves. The Company’s customers-particularly local businesses engaged in agriculture, manufacturing, and retail-may face higher costs for imported goods and materials, reduced export demand, and supply chain disruptions due to increased tariffs.
Added
These challenges could lead to lower revenues, reduced profitability, and potential layoffs, all of which may impair the Company’s customers' ability to meet their financial obligations. Furthermore, prolonged trade tensions and economic uncertainty could lead to market volatility, declining asset values, and weakened consumer confidence.
Added
If its customers experience financial stress, the Company could see an increase in loan delinquencies and credit losses, negatively affecting its asset quality and overall financial performance. Additionally, any decline in local economic activity could reduce loan demand, deposit growth, and fee income, which are critical to the Company’s long-term success.
Added
While it actively monitors economic and policy developments, the Company cannot predict the outcome of trade negotiations or the full impact of tariffs and trade restrictions on its business, customers, and the broader economy. Any adverse effects from tariffs or a trade war could materially and negatively impact its financial condition, results of operations, and future growth prospects.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeDuring 2022, the Company purchased the Scranton Electric Building for a future corporate headquarters in Scranton, PA, which is in the process to be placed on the National Register of Historic Places. Demolition of non-historical interior improvements is complete and the planned remodeling is underway, with the expected completion ready for 2026, see premises and equipemt discussion within Item 7.
Biggest changeDuring 2022, the Company purchased the Scranton Electric Building for a future corporate headquarters in Scranton, PA, with the expected completion ready in the second quarter of 2026, see premises and equipment discussion within Item 7. We believe each of our facilities is suitable and adequate to meet our current operational needs and intended purposes.
ITEM 2: PROPERTIES As of December 31, 2024, the Company and the Bank operated 21 full-service banking offices, of which eleven were owned and ten were leased. The Pittston branch property is subject to a lease with a company of which director, William J. Joyce, Sr., is a partner.
ITEM 2: PROPERTIES As of December 31, 2025, the Company and the Bank operated 21 full-service banking offices, of which eleven were owned and ten were leased. The Pittston branch property is subject to a lease with a company of which director, William J. Joyce, Sr., is a partner.
Executive and administrative, commercial lending, trust and asset management services are located at the Main Branch. The Company also operates a financial center in downtown Scranton, PA. Executive, mortgage and consumer lending, finance, operations and a full-service call center are located in this building.
Executive and administrative, commercial lending, trust and asset management services are located at the Main Branch. The Company also operates a financial center in downtown Scranton, PA which is expected to be sold in 2026 upon the completion of the corporate headquarters. Executive, mortgage and consumer lending, finance, operations and a full-service call center are located in this building.
The branch in the building was closed in September 2021 and the building was converted into a training center during 2022. Foreclosed assets held-for-sale includes other real estate owned (ORE). The Company had three ORE property as of December 31, 2024. Upon possession, foreclosed properties are recorded on the Company’s balance sheet at the lower of cost or fair value.
Foreclosed assets held-for-sale includes other real estate owned (ORE). The Company had one ORE property as of December 31, 2025. Upon possession, foreclosed properties are recorded on the Company’s balance sheet at the lower of cost or fair value.
The Company also operates a wealth management office in Minersville, PA under a short-term lease agreement. 17 Table of Contents Additionally, the Company has a limited production office in Scranton, PA that is currently leased for certain commercial lenders and credit department employees. The Company acquired a leased building in Scranton from the merger with Landmark Community Bank.
The Company also operates a wealth management office in Minersville, PA under a short-term lease agreement. Additionally, the Company has a limited production office in Scranton, PA that is currently leased for certain commercial lenders and credit department employees. This lease will end in 2026 and these employees will move to the corporate headquarters.
Removed
We believe each of our facilities is suitable and adequate to meet our current operational needs and intended purposes.
Added
The Company acquired a leased building in Scranton from the merger with Landmark Community Bank. The branch in the building was closed in September 2021 and the building was converted into a training center during 2022. This building will become vacant, and the training department will move to the corporate headquarters in 2026.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe shareholder return shown on the graph and table below is not necessarily indicative of future performance: Period Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Fidelity D & D Bancorp, Inc. 100.00 105.93 99.37 81.94 104.00 90.24 Russell 3000 Index 100.00 120.89 151.91 122.73 154.59 191.39 KBW NASDAQ Bank Index 100.00 89.69 124.06 97.52 96.65 132.60 20 Table of Contents ITEM 6: [Reserved]
Biggest changeThe shareholder return shown on the graph and table below is not necessarily indicative of future performance: Period Ending Index 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 Fidelity D & D Bancorp, Inc. 100.00 93.81 77.35 98.17 85.18 78.87 Russell 3000 Index 100.00 125.66 101.53 127.88 158.32 185.47 KBW NASDAQ Bank Index 100.00 138.33 108.73 107.76 147.85 196.00 19 Table of Contents ITEM 6: [Reserved]
Each security depository is considered a single shareholder for purposes of determining the approximate number of shareholders. 19 Table of Contents Performance graph The following graph and table compare the cumulative total shareholder return on the Company’s common stock against the cumulative total return of the Russell 3000 and KBW NASDAQ Bank index (the KBW NASDAQ index) for the period of five fiscal years commencing January 1, 2020, and ending December 31, 2024.
Each security depository is considered a single shareholder for purposes of determining the approximate number of shareholders. 18 Table of Contents Performance graph The following graph and table compare the cumulative total shareholder return on the Company’s common stock against the cumulative total return of the Russell 3000 and KBW NASDAQ Bank index (the KBW NASDAQ index) for the period of five fiscal years commencing January 1, 2021, and ending December 31, 2025.
The administrator may purchase shares directly from the Company, in the open market, in negotiated transactions with third parties or using a combination of these methods. The Company had approximately 1,585 shareholders at December 31, 2024 and 1,592 shareholders as of February 28, 2025. The number of shareholders is the actual number of distinct shareholders of record.
The administrator may purchase shares directly from the Company, in the open market, in negotiated transactions with third parties or using a combination of these methods. The Company had approximately 1,536 shareholders at December 31, 2025 and 1,538 shareholders as of February 28, 2026. The number of shareholders is the actual number of distinct shareholders of record.
The graph illustrates the cumulative investment return to shareholders, based on the assumption that a $100 investment was made on December 31, 2019, in each of: the Company’s common stock, the Russell 3000 and the KBW NASDAQ index. As of December 31, 2024, the KBW NASDAQ index consisted of 24 banks.
The graph illustrates the cumulative investment return to shareholders, based on the assumption that a $100 investment was made on December 31, 2020, in each of: the Company’s common stock, the Russell 3000 and the KBW NASDAQ index. As of December 31, 2025, the KBW NASDAQ index consisted of 23 banks.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [Reserved] 21 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation 21 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 59 Item 8. Report of Independent Registered Public Accounting Firm 60 Item 8. Financial Statements and Supplementary Data 60
Biggest changeItem 6. [Reserved] 20 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation 20 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 56 Item 8. Report of Independent Registered Public Accounting Firm 57 Item 8. Financial Statements and Supplementary Data 57

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

176 edited+34 added−55 removed192 unchanged
Biggest changeThe following table reconciles the non-GAAP financial measures of the efficiency ratio to GAAP: (dollars in thousands) 2024 2023 Efficiency Ratio (non-GAAP) Non-interest expenses (GAAP) $ 55,541 $ 51,870 Net interest income (GAAP) 61,865 62,047 Plus: taxable equivalent adjustment 3,036 2,850 Non-interest income (GAAP) 19,013 11,405 Less: (Loss) gain on sales of securities - (6,468 ) Net interest income (FTE) plus adjusted non-interest income (non-GAAP) $ 83,914 $ 82,770 Efficiency ratio (non-GAAP) 66.19 % 62.67 % The following table provides a reconciliation of the tangible common equity (non-GAAP) and the calculation of tangible book value per share, tangible common equity ratio and adjusted tangible common equity ratio: (dollars in thousands) 2024 2023 Tangible Book Value per Share (non-GAAP) Total assets (GAAP) $ 2,584,616 $ 2,503,159 Less: Intangible assets (20,504 ) (20,812 ) Tangible assets 2,564,112 2,482,347 Total shareholders' equity (GAAP) 203,969 189,479 Less: Intangible assets (20,504 ) (20,812 ) Tangible common equity $ 183,465 $ 168,667 Common shares outstanding, end of period 5,736,252 5,703,636 Tangible Common Book Value per Share (non-GAAP) $ 31.98 $ 29.57 Tangible Common Equity Ratio (non-GAAP) 7.16 % 6.79 % Unrealized losses on held-to-maturity securities, net of tax (24,640 ) (21,375 ) Adjusted tangible common equity ratio (non-GAAP) 6.19 % 5.93 % 22 Table of Contents The following tables provides a reconciliation of the Company’s earnings results under GAAP to comparative non-GAAP results excluding gain/loss on the sale of available-for-sale debt securities: 2024 (dollars in thousands except per share data) Income before income taxes Provision for income taxes Net income Diluted earnings per share Results of operations (GAAP) $ 23,872 $ 3,078 $ 20,794 $ 3.60 Add: Loss (gain) on the sale of available-for-sale debt securities - - - - Adjusted earnings (non-GAAP) $ 23,872 $ 3,078 $ 20,794 $ 3.60 2023 (dollars in thousands except per share data) Income before income taxes Provision for income taxes Net income Diluted earnings per share Results of operations (GAAP) $ 20,256 $ 2,046 $ 18,210 $ 3.19 Add: Loss (gain) on the sale of available-for-sale debt securities 6,468 1,358 5,110 0.89 Adjusted earnings (non-GAAP) $ 26,724 $ 3,404 $ 23,320 $ 4.08 The following table provides a reconciliation of pre-provision net revenue (PPNR) to average assets (non-GAAP): (dollars in thousands) 2024 2023 Pre-Provision Net Revenue to Average Assets Income before taxes (GAAP) $ 23,872 $ 20,256 Plus: Provision for credit losses 1,465 1,326 Total pre-provision net revenue (non-GAAP) $ 25,337 $ 21,582 Average assets $ 2,493,659 $ 2,405,096 Pre-Provision Net Revenue to Average Assets (non-GAAP) 1.02 % 0.90 % 23 Table of Contents Comparison of Financial Condition as of December 31, 2024 and 2023 and Results of Operations for each of the Years then Ended Executive Summary The Company generated $20.8 million in net income in 2024, or $3.60 diluted earnings per share, an increase of $2.6 million, or 14%, from $18.2 million, or $3.19 diluted earnings per share, in 2023.
Biggest changeThe following table reconciles the non-GAAP financial measures of the efficiency ratio to GAAP: (dollars in thousands) 2025 2024 Efficiency Ratio (non-GAAP) Non-interest expenses (GAAP) $ 58,817 $ 55,541 Net interest income (GAAP) 72,671 61,865 Plus: taxable equivalent adjustment 3,116 3,036 Non-interest income (GAAP) 20,559 19,013 Loss on sales of securities 1,190 - Net interest income (FTE) plus adjusted non-interest income (non-GAAP) $ 97,536 $ 83,914 Efficiency ratio (non-GAAP) 60.30 % 66.19 % The following table provides a reconciliation of the tangible common equity (non-GAAP) and the calculation of tangible book value per share, tangible common equity ratio and adjusted tangible common equity ratio: (dollars in thousands) 2025 2024 Tangible Book Value per Share (non-GAAP) Total assets (GAAP) $ 2,748,058 $ 2,584,616 Less: Intangible assets (20,242 ) (20,504 ) Tangible assets 2,727,816 2,564,112 Total shareholders' equity (GAAP) 238,860 203,969 Less: Intangible assets (20,242 ) (20,504 ) Tangible common equity $ 218,618 $ 183,465 Common shares outstanding, end of period 5,771,110 5,736,252 Tangible Common Book Value per Share (non-GAAP) $ 37.88 $ 31.98 Tangible Common Equity Ratio (non-GAAP) 8.01 % 7.16 % Unrealized losses on held-to-maturity securities, net of tax $ (19,119 ) $ (24,640 ) Adjusted tangible common equity ratio (non-GAAP) 7.31 % 6.19 % The following table provides a reconciliation of pre-provision net revenue (PPNR) to average assets (non-GAAP): (dollars in thousands) 2025 2024 Pre-Provision Net Revenue to Average Assets Income before taxes (GAAP) $ 33,143 $ 23,872 Plus: Provision for credit losses 1,270 1,465 Total pre-provision net revenue (non-GAAP) $ 34,413 $ 25,337 Average assets $ 2,689,705 $ 2,493,659 Pre-Provision Net Revenue to Average Assets (non-GAAP) 1.28 % 1.02 % 21 Table of Contents Comparison of Financial Condition as of December 31, 2025 and 2024 and Results of Operations for each of the Years then Ended Executive Summary The Company generated $28.2 million in net income in 2025, or $4.89 earnings per share, ($4.86 diluted earnings per share) an increase of $7.4 million, or 36%, from $20.8 million, or $3.63 earnings per share, ($3.60 diluted earnings per share) in 2024.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.
Generally, deposits are obtained from consumers, businesses and public entities within the communities that surround the Company’s 21 branch offices and all deposits are insured by the FDIC up to the full extent permitted by law. Deposit products consist of transaction accounts including: savings; clubs; interest-bearing checking; money market; non-interest bearing checking (DDA).
Generally, deposits are obtained from consumers, businesses and public entities within the communities that surround the Company’s 21 branch offices and all deposits are insured by the FDIC up to the extent permitted by law. Deposit products consist of transaction accounts including: savings; clubs; interest-bearing checking; money market; non-interest bearing checking (DDA).
Dodd-Frank permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal laws and regulations. 57 Table of Contents In summary, the Dodd-Frank Act provides for sweeping financial regulatory reform and may have the effect of increasing the cost of doing business, limiting or expanding permissible activities and affect the competitive balance between banks and other financial intermediaries.
Dodd-Frank permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal laws and regulations. 54 Table of Contents In summary, the Dodd-Frank Act provides for sweeping financial regulatory reform and may have the effect of increasing the cost of doing business, limiting or expanding permissible activities and affect the competitive balance between banks and other financial intermediaries.
The effective maturities presented are the recommended maturity distribution limits for non-maturing deposits based on historical deposit studies. 53 Table of Contents Earnings at Risk and Economic Value at Risk Simulations . The Company recognizes that more sophisticated tools exist for measuring the interest rate risk in the balance sheet that extend beyond static re-pricing gap analysis.
The effective maturities presented are the recommended maturity distribution limits for non-maturing deposits based on historical deposit studies. 50 Table of Contents Earnings at Risk and Economic Value at Risk Simulations . The Company recognizes that more sophisticated tools exist for measuring the interest rate risk in the balance sheet that extend beyond static re-pricing gap analysis.
The median home values in the Scranton-Wilkes-Barre-Hazleton metro and Allentown-Bethlehem-Easton metro each increased 7.0% and 5.4% from a year ago, according to Zillow, an online database advertising firm providing access to its real estate search engines to various media outlets, and values are expected to grow 1.8% and 2.8% in the next year.
The median home values in the Scranton-Wilkes-Barre-Hazleton metro and Allentown-Bethlehem-Easton metro each increased 5.1% and 2.8% from a year ago, according to Zillow, an online database advertising firm providing access to its real estate search engines to various media outlets, and values are expected to grow 2.5% and 2.7% in the next year.
If a decline in value is deemed to be a credit loss, a contra-asset is recorded on both HTM and AFS securities, limited by the amount that the fair value is less than the amortized cost basis. During the year ended December 31, 2024, the Company did not incur any credit losses on debt securities from its investment securities portfolio.
If a decline in value is deemed to be a credit loss, a contra-asset is recorded on both HTM and AFS securities, limited by the amount that the fair value is less than the amortized cost basis. During the year ended December 31, 2025, the Company did not incur any credit losses on debt securities from its investment securities portfolio.
At least quarterly, the CFP monitoring tools, current liquidity position and monthly projected liquidity sources and uses are presented and reviewed by the Company’s Asset/Liability Committee. As of December 31, 2024, the Company had not experienced any adverse issues that would give rise to its inability to raise liquidity in an emergency situation.
At least quarterly, the CFP monitoring tools, current liquidity position and monthly projected liquidity sources and uses are presented and reviewed by the Company’s Asset/Liability Committee. As of December 31, 2025, the Company had not experienced any adverse issues that would give rise to its inability to raise liquidity in an emergency situation.
Within the table, interest income was FTE adjusted, using the corporate federal tax rate of 21% for 2024 and 2023, to recognize the income from tax-exempt interest-earning assets as if the interest was taxable. See “Non-GAAP Financial Measures” within this management’s discussion and analysis for the FTE adjustments. This treatment allows a uniform comparison among yields on interest-earning assets.
Within the table, interest income was FTE adjusted, using the corporate federal tax rate of 21% for 2025 and 2024, to recognize the income from tax-exempt interest-earning assets as if the interest was taxable. See “Non-GAAP Financial Measures” within this management’s discussion and analysis for the FTE adjustments. This treatment allows a uniform comparison among yields on interest-earning assets.
The Company closely monitors activity in the capital markets and takes appropriate action to ensure that the liquidity levels are adequate for funding, investing and operating activities. 50 Table of Contents The Company’s contingency funding plan (CFP) sets a framework for handling liquidity issues in the event circumstances arise which the Company deems to be less than normal.
The Company closely monitors activity in the capital markets and takes appropriate action to ensure that the liquidity levels are adequate for funding, investing and operating activities. 47 Table of Contents The Company’s contingency funding plan (CFP) sets a framework for handling liquidity issues in the event circumstances arise which the Company deems to be less than normal.
Loans include loans held-for-sale (HFS) and non-accrual loans but exclude the allowance for credit losses. HELOC are included in the residential real estate category since they are secured by real estate. Net deferred loan (cost amortization)/ fee accretion of ($0.9 million) in 2024 and ($0.9 million) in 2023, respectively, are included in interest income from loans.
Loans include loans held-for-sale (HFS) and non-accrual loans but exclude the allowance for credit losses. HELOC are included in the residential real estate category since they are secured by real estate. Net deferred loan (cost amortization)/ fee accretion of ($0.9 million) in 2025 and ($0.9 million) in 2024, respectively, are included in interest income from loans.
Short-term borrowings may include overnight balances with FHLB's line of credit and/or correspondent banks federal funds lines which the Company may require to fund daily liquidity needs such as deposit outflow, loan demand and operations. As of December 31, 2024, the Company did not use any short-term borrowings to fund loan growth.
Short-term borrowings may include overnight balances with FHLB's line of credit and/or correspondent banks federal funds lines which the Company may require to fund daily liquidity needs such as deposit outflow, loan demand and operations. As of December 31, 2025, the Company did not use any short-term borrowings to fund loan growth.
The Company continues to focus on the trusted financial advisor model by utilizing the team approach of experienced bankers that are fully engaged and dedicated towards maintaining and growing profitable relationships. During 2025, the Company currently expects to operate in a moderately declining interest rate environment throughout the year.
The Company continues to focus on the trusted financial advisor model by utilizing the team approach of experienced bankers that are fully engaged and dedicated towards maintaining and growing profitable relationships. During 2026, the Company currently expects to operate in a moderately declining interest rate environment throughout the year.
The Company continued provisioning for twelve months ended December 31, 2024 to maintain an allowance level that management deemed adequate. For a discussion on the allowance for credit losses, see “Allowance for credit losses,” located in the comparison of financial condition section of management’s discussion and analysis contained herein.
The Company continued provisioning for twelve months ended December 31, 2025 to maintain an allowance level that management deemed adequate. For a discussion on the allowance for credit losses, see “Allowance for credit losses,” located in the comparison of financial condition section of management’s discussion and analysis contained herein.
Recoveries from previously charged-off loans are added to the allowance when received. 36 Table of Contents The methodology to analyze the adequacy of the ACL is based on seven primary components: ● Data: The quality of the Company’s data is critically important as a foundation on which the ACL estimate is generated.
Recoveries from previously charged-off loans are added to the allowance when received. 33 Table of Contents The methodology to analyze the adequacy of the ACL is based on seven primary components: ● Data: The quality of the Company’s data is critically important as a foundation on which the ACL estimate is generated.
Management believes the Company’s interest rate risk measurement framework is sound and provides an effective means to measure, monitor, analyze, identify and control interest rate risk in the balance sheet. 51 Table of Contents The Company is subject to the interest rate risks inherent in its lending, investing and financing activities.
Management believes the Company’s interest rate risk measurement framework is sound and provides an effective means to measure, monitor, analyze, identify and control interest rate risk in the balance sheet. 48 Table of Contents The Company is subject to the interest rate risks inherent in its lending, investing and financing activities.
The following table sets forth the maturity distribution of commercial and construction components of the loan portfolio at December 31, 2024. The determination of maturities is based on contractual terms. Non-contractual rollovers or extensions are included in one year or less category of the maturity classification.
The following table sets forth the maturity distribution of commercial and construction components of the loan portfolio at December 31, 2025. The determination of maturities is based on contractual terms. Non-contractual rollovers or extensions are included in one year or less category of the maturity classification.
Dodd-Frank additionally requires that bank regulators issue countercyclical capital requirements so that the required amount of capital increases in times of economic expansion and decreases in times of economic contraction, consistent with safety and soundness. 56 Table of Contents Deposit Insurance.
Dodd-Frank additionally requires that bank regulators issue countercyclical capital requirements so that the required amount of capital increases in times of economic expansion and decreases in times of economic contraction, consistent with safety and soundness. 53 Table of Contents Deposit Insurance.
In addition, the Company’s non-GAAP measures may not be comparable to non-GAAP measures of other companies. The Company’s tax rate used to calculate the fully-taxable equivalent (FTE) adjustment was 21% as of December 31, 2024 and 2023.
In addition, the Company’s non-GAAP measures may not be comparable to non-GAAP measures of other companies. The Company’s tax rate used to calculate the fully-taxable equivalent (FTE) adjustment was 21% as of December 31, 2025 and 2024.
As of December 31, 2024, the unallocated reserve, representing the portion of the allowance not specifically identified with a loan or groups of loans, was less than 1% of the total allowance for credit losses, unchanged from December 31, 2023.
As of December 31, 2025, the unallocated reserve, representing the portion of the allowance not specifically identified with a loan or groups of loans, was less than 1% of the total allowance for credit losses, unchanged from December 31, 2024.
Recent Legislation and Rulemaking 55 Table of Contents Regulatory Capital Changes In July 2013, the federal banking agencies issued final rules to implement the Basel III regulatory capital reforms and changes required by the Dodd-Frank Act.
Recent Legislation and Rulemaking 52 Table of Contents Regulatory Capital Changes In July 2013, the federal banking agencies issued final rules to implement the Basel III regulatory capital reforms and changes required by the Dodd-Frank Act.
A material estimate that is particularly susceptible to significant change relates to the determination of the allowance for credit losses. Management believes that the allowance for credit losses at December 31, 2024 is adequate and reasonable to cover expected losses.
A material estimate that is particularly susceptible to significant change relates to the determination of the allowance for credit losses. Management believes that the allowance for credit losses at December 31, 2025 is adequate and reasonable to cover expected losses.
The costs of acquiring and maintaining talent may increase salaries and employee benefit expenses, primarily salaries, incentives and group insurance, in 2025. Additionally, the Company's technology platforms continue to evolve and require periodic upgrades.
The costs of acquiring and maintaining talent may increase salaries and employee benefit expenses, primarily salaries, incentives and group insurance, in 2026. Additionally, the Company's technology platforms continue to evolve and require periodic upgrades.
The impact of the rate movements was developed by simulating the effect of the rate change over a twelve-month period from the December 31, 2024 levels: % change Rates +200 Rates -200 Earnings at risk: Net interest income (0.6 )% (4.7 )% Net income (0.4 ) (12.7 ) Economic value at risk: Economic value of equity (5.2 ) (0.3 ) Economic value of equity as a percent of total assets (0.7 ) (0.1 ) In the scenarios in the above table, the Board-approved policy has the following guidelines: net interest income within +/- 10%, net income within +/- 25%, economic value of equity within +/- 25%, economic value of equity as a percent of total assets within +/-5%.
The impact of the rate movements was developed by simulating the effect of the rate change over a twelve-month period from the December 31, 2025 levels: % change Rates +200 Rates -200 Earnings at risk: Net interest income 2.7 % (4.6 )% Net income 5.6 (10.1 ) Economic value at risk: Economic value of equity 5.0 (7.6 ) Economic value of equity as a percent of total assets 0.7 (1.1 ) In the scenarios in the above table, the Board-approved policy has the following guidelines: net interest income within +/- 10%, net income within +/- 25%, economic value of equity within +/- 25%, economic value of equity as a percent of total assets within +/-5%.
As of December 31, 2024, approximately 77% of the gross loan portfolio was secured by real estate compared to 75% at December 31, 2023. Allowance for credit losses Management continually evaluates the credit quality of the Company’s loan portfolio and performs a formal review of the adequacy of the allowance for credit losses (ACL) on a quarterly basis.
As of December 31, 2025, approximately 77% of the gross loan portfolio was secured by real estate compared to 77% at December 31, 2024. Allowance for credit losses Management continually evaluates the credit quality of the Company’s loan portfolio and performs a formal review of the adequacy of the allowance for credit losses (ACL) on a quarterly basis.
Key loss driver assumptions used in the allowance estimate included the median Federal Open Market Committee (FOMC) National Gross Domestic Product (GDP) and unemployment rate forecasts, the Federal Housing Finance Agency (FHFA) House Price Index (HPI), prepayment and curtailment rates, and estimated remaining loan lives.
Key loss driver assumptions used in the allowance estimate included the median FOMC National Gross Domestic Product (GDP) and unemployment rate forecasts, the Federal Housing Finance Agency (FHFA) House Price Index (HPI), prepayment and curtailment rates, and estimated remaining loan lives.
The following discussion and analysis presents the significant changes in the financial condition and in the results of operations of the Company as of December 31, 2024 and 2023 and for each of the years then ended.
The following discussion and analysis presents the significant changes in the financial condition and in the results of operations of the Company as of December 31, 2025 and 2024 and for each of the years then ended.
The committee is comprised of management, including credit administration officers, loan officers, loan workout officers and collection personnel. 46 Table of Contents Management continuously reviews the risks inherent in the loan portfolio.
The committee is comprised of management, including credit administration officers, loan officers, loan workout officers and collection personnel. 43 Table of Contents Management continuously reviews the risks inherent in the loan portfolio.
For 2025, the Company currently maintains a loan pipeline which is expected to grow the loan portfolio funded by utilizing excess cash holdings and will plan to borrow in the event cash is depleted and there is not enough deposit growth to fund loan growth.
For 2026, the Company maintains a loan pipeline which is expected to grow the loan portfolio funded by utilizing excess cash holdings and will plan to borrow in the event cash is depleted and there is not enough deposit growth to fund loan growth.
An additional $1.7 million was recorded from the issuance of common stock under the Company’s stock plans and stock-based compensation expense. At December 31, 2024, there were no credit losses on available-for-sale and held-to-maturity debt securities.
An additional $1.3 million was recorded from the issuance of common stock under the Company’s stock plans and stock-based compensation expense. At December 31, 2025, there were no credit losses on available-for-sale and held-to-maturity debt securities.
This analysis assumed that the adjusted interest-earning asset and interest-bearing liability levels at December 31, 2024 remained constant.
This analysis assumed that the adjusted interest-earning asset and interest-bearing liability levels at December 31, 2025 remained constant.
For the year ended December 31, 2024, the provision for credit losses on loans was $1.3 million and the provision for credit losses on unfunded commitments was $0.1 million, compared to a $1.5 million provision for credit losses on loans and a $0.2 million net benefit for the provision for unfunded commitments for the year ended December 31, 2023.
For the year ended December 31, 2025, the provision for credit losses on loans was $1.1 million and the provision for credit losses on unfunded commitments was $0.2 million, compared to a $1.3 million provision for credit losses on loans and a $0.1 million net benefit for the provision for unfunded commitments for the year ended December 31, 2024.
The remaining building costs could range from $20 million to $22 million. This estimated range may expand due to unknown supply chain issues, labor pricing, design changes, or upgrades required to meet current codes. The Company currently estimates furniture and office equipment costs at $3.2 million and technology equipment and infrastructure at $0.6 million.
The remaining building costs could range from $7 million to $9 million. This estimated range may expand due to unknown supply chain issues, labor pricing, design changes, or upgrades required to meet current codes. The Company currently estimates furniture and office equipment costs at $2.0 million and technology equipment and infrastructure at $0.6 million.
The Company does not expect to have any FHLB advances in 2025. Funds Deployed: Investment Securities The Company’s investment policy is designed to complement its lending activities, provide monthly cash flow, manage interest rate sensitivity and generate a favorable return without incurring excessive interest rate and credit risk while managing liquidity at acceptable levels.
The Company does not expect to have any FHLB advances in 2026. 25 Table of Contents Funds Deployed: Investment Securities The Company’s investment policy is designed to complement its lending activities, provide monthly cash flow, manage interest rate sensitivity and generate a favorable return without incurring excessive interest rate and credit risk while managing liquidity at acceptable levels.
The overall credit ratings of these municipal bonds was as follows: 37% AAA, 61% AA, and 1% A. For HTM municipal securities, the Company utilized a third-party model to analyze whether a credit loss reserve is needed for these bonds.
The overall credit ratings of these municipal bonds was as follows: 35% AAA, 63% AA, and 1% A. For HTM municipal securities, the Company utilized a third-party model to analyze whether a credit loss reserve is needed for these bonds.
If the non-accrual loans that were outstanding as of December 31, 2024 had been performing in accordance with their original terms, the Company would have recognized interest income with respect to such loans of $354 thousand.
If the non-accrual loans that were outstanding as of December 31, 2025 had been performing in accordance with their original terms, the Company would have recognized interest income with respect to such loans of $144 thousand.
Purchase accounting adjustments of $1.6 million and $2.5 million are included in interest income from loans and $8 thousand and $32 thousand reduced interest expense on deposits and borrowings for 2024 and 2023. Average balances are based on amortized cost and do not reflect net unrealized gains or losses.
Purchase accounting adjustments of $1.3 million and $1.6 million are included in interest income from loans and $5 thousand and $8 thousand reduced interest expense on deposits and borrowings for 2025 and 2024. Average balances are based on amortized cost and do not reflect net unrealized gains or losses.
Bureau of Labor Statistics, the local unemployment rates at December 31, 2024 were 3.8% in the market area north and 3.4% in the market area south, respectively, an increase of 0.3 and 0.1 percentage points from the 3.5% and 3.3%, respectively, at December 31, 2023.
Bureau of Labor Statistics, the local unemployment rates at December 31, 2025 were 4.3% in the market area north and 3.9% in the market area south, respectively, an increase of 0.5 and 0.5 percentage points from the 3.8% and 3.4%, respectively, at December 31, 2024.
For the year ended December 31, 2024, the increase in the provision for credit losses on unfunded commitments compared to the prior period was due to growth in unfunded commitments, specifically in commercial construction commitments. The provision for credit losses derives from the reserve required from the allowance for credit losses calculation.
For the year ended December 31, 2025, the increase in the provision for credit losses on unfunded commitments compared to the prior period was due to originated growth in the portfolio, specifically in commercial construction commitments. The provision for credit losses derives from the reserve required from the allowance for credit losses calculation.
As of December 31, 2024, the commercial real estate loan portfolio was 42% of the total loan and lease portfolio indicative of a higher relative reserve, which is attributed to the longer average duration and inherent risk of the portfolio.
As of December 31, 2025, the commercial real estate loan portfolio was 43% of the total loan and lease portfolio indicative of a higher relative reserve, which is attributed to the longer average duration and inherent risk of the portfolio.
Uncollected interest income accrued on all loans placed on non-accrual is reversed and charged to interest income. Non-performing assets represented 0.30% of total assets at December 31, 2024 compared with 0.13% at December 31, 2023.
Uncollected interest income accrued on all loans placed on non-accrual is reversed and charged to interest income. Non-performing assets represented 0.08% of total assets at December 31, 2025 compared with 0.30% at December 31, 2024.
Secured borrowings are expected to decrease throughout 2025 from scheduled amortization and, when possible, early pay-offs. FHLB advances The Company had no FHLB advances as of December 31, 2024 and 2023. As of December 31, 2024, the Company had the ability to borrow up to $733.2 million from the FHLB, net of any overnight borrowings utilized.
Secured borrowings are expected to decrease throughout 2026 from scheduled amortization and, when possible, early pay-offs. FHLB advances The Company had no FHLB advances as of December 31, 2025 and 2024. As of December 31, 2025, the Company had the ability to borrow up to $812.7 million from the FHLB, net of any overnight borrowings utilized.
The increase in the allowance was based on the provisioning of $1.3 million partially offset by net charge-offs of $0.5 million.
The increase in the allowance was based on the provisioning of $1.1 million partially offset by net charge-offs of $0.6 million.
At December 31, 2024, the Company’s risk-based capital ratio was 14.78%.
At December 31, 2025, the Company’s risk-based capital ratio was 14.78%.
The Company’s dividend payout ratio, defined as the rate at which current earnings are paid to shareholders, was 42.96% and 46.06% for the years ended December 31, 2024 and 2023, respectively. The balance of earnings is retained to further strengthen the Company’s capital position.
The Company’s dividend payout ratio, defined as the rate at which current earnings are paid to shareholders, was 33.70% and 42.96% for the years ended December 31, 2025 and 2024, respectively. The balance of earnings is retained to further strengthen the Company’s capital position.
Pennsylvania state law requires the Company to maintain pledged securities on public and trust deposits or otherwise obtain a FHLB letter of credit or FDIC insurance for these customers. The Company also pledges securities for derivative instruments and certain borrowed funds. As of December 31, 2024, the balance of pledged securities required was $322.1 million, or 58% of total securities.
Pennsylvania state law requires the Company to maintain pledged securities on public and trust deposits or otherwise obtain a FHLB letter of credit or FDIC insurance for these customers. The Company also pledges securities for derivative instruments and certain borrowed funds. As of December 31, 2025, the balance of pledged securities required was $299.0 million, or 57% of total securities.
As of December 31, 2024, the commercial and industrial portfolio comprised 12% of the total allowance for credit losses, up 2 percentage points from December 31, 2023.
As of December 31, 2025, the commercial and industrial portfolio comprised 14% of the total allowance for credit losses, up 2 percentage points from December 31, 2024.
We believe expanding our market area gives us opportunity for profitable growth and we will continue to monitor the economic climate in our region, scrutinize growth prospects and proactively observe existing credits for early warning signs of risk deterioration. In addition to the challenging economic environment, regulatory oversight has changed significantly in recent years.
We intend to continuously expand our market area, giving us opportunity for profitable growth and we will continue to monitor the economic climate, scrutinize growth prospects and proactively observe existing credits for early warning signs of risk deterioration. In addition to the challenging economic environment, regulatory oversight has changed significantly in recent years.
As of December 31, 2024, the Company had the ability to borrow $157.3 million from the Federal Reserve borrower-in-custody program, full availability of $150.0 million in overnight borrowings with the FHLB open-repo line of credit and $20.0 million from lines of credit with correspondent banks.
As of December 31, 2025, the Company had the ability to borrow $145.0 million from the Federal Reserve borrower-in-custody program, full availability of $150.0 million in overnight borrowings with the FHLB open-repo line of credit and $30.0 million from lines of credit with correspondent banks.
At December 31, 2024, the Company maintained a one-year cumulative gap of positive (asset sensitive) $9.3 million, or 0.4%, of total assets. The effect of this positive gap position provided a mismatch of assets and liabilities which may expose the Company to interest rate risk during periods of falling interest rates.
At December 31, 2025, the Company maintained a one-year cumulative gap of positive (asset sensitive) $53.2 million, or 1.9%, of total assets. The effect of this positive gap position provided a mismatch of assets and liabilities which may expose the Company to interest rate risk during periods of falling interest rates.
As of December 31, 2024 and 2023, loans HFS consisted of residential mortgages with carrying amounts of $2.1 million and $1.5 million, respectively, which approximated their fair values.
As of December 31, 2025 and 2024, loans HFS consisted of residential mortgages with carrying amounts of $0.6 million and $2.1 million, respectively, which approximated their fair values.
This profitability is used to offset a portion of current and future employee benefit costs. The BOLI cash surrender value build-up can be liquidated if necessary, with associated tax costs. However, the Company intends to hold this pool of insurance, because it provides income that supports employee benefit cost increases which enhances the Company’s capital position.
The BOLI cash surrender value build-up can be liquidated if necessary, with associated tax costs. However, the Company intends to hold this pool of insurance, because it provides income that supports employee benefit cost increases which enhances the Company’s capital position.
The Company’s sources (uses) of capital during the previous five years are indicated below: Cash Other retained Total DRP Issuance of Changes in Net dividends earnings earnings and ESPP common stock AOCI and Capital (dollars in thousands) income declared adjustments retained infusion for acquisition other changes retained (utilized) 2024 $ 20,794 $ (8,932 ) $ - $ 11,862 $ 363 $ - $ 2,265 $ 14,490 2023 18,210 (8,387 ) (1,326 ) 8,497 1,938 - 16,094 26,529 2022 30,021 (7,709 ) - 22,312 252 - (71,343 ) (48,779 ) 2021 24,008 (6,608 ) - 17,400 270 35,056 (7,667 ) 45,059 2020 13,035 (5,378 ) - 7,657 219 45,408 6,551 59,835 As of December 31, 2024, the Company reported a net unrealized loss position of $55.6 million, net of tax, from the securities portfolio compared to a net unrealized loss of $56.5 million as of December 31, 2023.
The Company’s sources (uses) of capital during the previous five years are indicated below: Cash Other retained Total DRP Issuance of Changes in Net dividends earnings earnings and ESPP common stock AOCI and Capital (dollars in thousands) income declared adjustments retained infusion for acquisition other changes retained (utilized) 2025 $ 28,198 $ (9,504 ) $ - $ 18,694 $ 348 $ - $ 15,849 $ 34,891 2024 20,794 (8,932 ) - 11,862 363 - 2,265 14,490 2023 18,210 (8,387 ) (1,326 ) 8,497 1,938 - 16,094 26,529 2022 30,021 (7,709 ) - 22,312 252 - (71,343 ) (48,779 ) 2021 24,008 (6,608 ) - 17,400 270 35,056 (7,667 ) 45,059 As of December 31, 2025, the Company reported a net unrealized loss position of $40.7 million, net of tax, from the securities portfolio compared to a net unrealized loss of $55.6 million as of December 31, 2024.
Net interest income is the difference between interest income and interest expense. Interest income is generated from yields earned on interest-earning assets, which consist principally of loans and investment securities. Interest expense is incurred from rates paid on interest-bearing liabilities, which consist of deposits and borrowings.
Results of Operation Earnings Summary The Company’s earnings depend primarily on net interest income. Net interest income is the difference between interest income and interest expense. Interest income is generated from yields earned on interest-earning assets, which consist principally of loans and investment securities. Interest expense is incurred from rates paid on interest-bearing liabilities, which consist of deposits and borrowings.
The focus remains to manage margin enhancement by reallocating cash flow to focus growth on specific assets, being proactive with loan pricing and managing deposit costs to maintain a reasonable spread. Nationally, the unemployment rate rose from 3.7% at December 31, 2023 to 4.1% at December 31, 2024.
The focus remains on enhancing margin by reallocating cash flow to focus growth on specific higher yielding assets, being proactive with loan pricing, and managing deposit costs to maintain a reasonable spread. Nationally, the unemployment rate rose from 4.1% at December 31, 2024 to 4.4% at December 31, 2025.
The $0.9 million improvement during 2024 was from the amortization of unrealized losses on held-to-maturity securities partially offset by unrealized losses on AFS securities. Management believes that changes in fair value of the Company’s securities are due to changes in interest rates and not in the creditworthiness of the issuers. Generally, when U.S.
The $14.9 million improvement during 2025 was from the amortization of unrealized losses on held-to-maturity securities coupled with improvement in unrealized losses on AFS securities. Management believes that changes in fair value of the Company’s securities are due to changes in interest rates and not in the creditworthiness of the issuers. Generally, when U.S.
Unfunded commitments of existing loan facilities totaled $455.5 million, standby letters of credit totaled $30.6 million and the level of uninsured and non-collateralized deposits was $562.2 million at December 31, 2024. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Unfunded commitments of existing loan facilities totaled $511.0 million, standby letters of credit totaled $28.0 million and the level of uninsured and non-collateralized deposits was $656.5 million at December 31, 2025. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Securities designated as HTM are carried at amortized cost and represent debt securities that the Company has the ability and intent to hold until maturity. For the year ended December 31, 2024, AOCI improved by $0.9 million primarily due to amortization of unrealized losses on securities transferred from AFS to HTM.
Securities designated as HTM are carried at amortized cost and represent debt securities that the Company has the ability and intent to hold until maturity. For the year ended December 31, 2025, AOCI improved by $14.9 million primarily due to unrealized gains on securities AFS.
As interest rates along the treasury yield curve rise, especially at the intermediate and long end, the values of debt securities tend to decline.
Generally, the values of debt securities move in the opposite direction of the changes in interest rates. As interest rates along the treasury yield curve rise, especially at the intermediate and long end, the values of debt securities tend to decline.
Refer to the information with respect to capital requirements contained in Note 15, “Regulatory Matters”, within the notes to the consolidated financial statements, and incorporated by reference in Part II, Item 8. 49 Table of Contents During the year ended December 31, 2024, total shareholders' equity increased $14.5 million, or 8%, from $189.5 million at December 31, 2023.
Refer to the information with respect to capital requirements contained in Note 15, “Regulatory Matters”, within the notes to the consolidated financial statements, and incorporated by reference in Part II, Item 8. 46 Table of Contents During the year ended December 31, 2025, total shareholders' equity increased $34.9 million, or 17%, from $204.0 million at December 31, 2024.
As of December 31, 2024, the carrying value of held-to-maturity securities was $225.8 million, net of $13.8 million in remaining transferred discount. The Company utilized a fair value hedge to designate and swap a portion of the fixed rate AFS portfolio.
As of December 31, 2025, the carrying value of held-to-maturity securities was $227.3 million, net of $11.9 million in remaining transferred discount. The Company utilized a fair value hedge to designate and swap a portion of the fixed rate AFS portfolio.
This increase was attributed to $21.4 million in commercial construction commitments originated during the year and $13.9 million in advances during the year on commercial construction loan availability originated prior to December 31, 2023.
This increase was attributed to $24.4 million in commercial construction commitments originated during the year and $19.9 million in advances during the year on commercial construction loan availability booked prior to December 31, 2025.
The Company’s effective income tax rate approximated 12.9% in 2024 and 10.1% in 2023. The difference between the effective rate and the enacted statutory corporate rate of 21% is due mostly to the effect of tax-exempt income in relation to the level of pre-tax income. The increase in the effective tax rate was primarily due to higher pre-tax income.
The difference between the effective rate and the enacted statutory corporate rate of 21% is due mostly to the effect of tax-exempt income in relation to the level of pre-tax income. The increase in the effective tax rate was primarily due to higher pre-tax income.
The residential real estate loan portfolio (non-construction) consisted primarily of held-for-investment residential loans for primary residences, including approximately $401 million in fixed-rate and $104 million in adjustable-rate mortgages as of December 31, 2024. 35 Table of Contents The Company considers its portfolio segmentation, including the real estate secured portfolio, to be normal and reasonably diversified.
The residential real estate loan portfolio consisted primarily of held-for-investment residential loans for primary residences, including approximately $410 million in fixed-rate and $105 million in adjustable-rate mortgages as of December 31, 2025. The Company considers its portfolio segmentation, including the real estate secured portfolio, to be normal and reasonably diversified.
The following table sets forth non-performing assets at December 31: (dollars in thousands) 2024 2023 Loans past due 90 days or more and accruing $ 32 $ 14 Non-accrual loans 7,343 3,308 Total non-performing loans 7,375 3,322 Other real estate owned and repossessed assets 430 1 Total non-performing assets $ 7,805 $ 3,323 Total loans, including loans held-for-sale $ 1,800,856 $ 1,686,555 Total assets $ 2,584,616 $ 2,503,159 Non-accrual loans to total loans 0.41 % 0.20 % Non-performing loans to total loans 0.41 % 0.20 % Non-performing assets to total assets 0.30 % 0.13 % Management continually monitors the loan portfolio to identify loans that are either delinquent or are otherwise deemed by management unable to repay in accordance with contractual terms.
The following table sets forth non-performing assets at December 31: (dollars in thousands) 2025 2024 Loans past due 90 days or more and accruing $ - $ 32 Non-accrual loans 1,892 7,343 Total non-performing loans 1,892 7,375 Other real estate owned and repossessed assets 326 430 Total non-performing assets $ 2,218 $ 7,805 Total loans, including loans held-for-sale $ 1,911,724 $ 1,800,856 Total assets $ 2,748,058 $ 2,584,616 Non-accrual loans to total loans 0.10 % 0.41 % Non-performing loans to total loans 0.10 % 0.41 % Non-performing assets to total assets 0.08 % 0.30 % Management continually monitors the loan portfolio to identify loans that are either delinquent or are otherwise deemed by management unable to repay in accordance with contractual terms.
The Company’s marketing department, together with ALM, and service-driven branch and relationship managers, continue to develop prudent strategies that will grow the loan portfolio and accumulate relationship driven deposits at costs lower than borrowing costs to improve net interest income performance.
ALM also discusses revenue enhancing strategies to help combat the potential for a decline in net interest income. The Company’s marketing department, together with ALM, and service-driven branch and relationship managers, continue to develop prudent strategies that will grow the loan portfolio and accumulate relationship driven deposits at costs lower than borrowing costs to improve net interest income performance.
(1) See non-GAAP financial measurements reconciliation on page 22. 24 Table of Contents Branch managers, relationship bankers, mortgage originators and our business service partners are all focused on developing a mutually profitable full banking relationship with our clients. We understand our markets, offer products and services along with financial advice that is appropriate for our community, clients and prospects.
Branch managers, relationship bankers, mortgage originators and our business service partners are all focused on developing a mutually profitable full banking relationship with our clients. We understand our markets, offer products and services along with financial advice that is appropriate for our community, clients and prospects.
For more information on the calculation of pre-provision net revenue to average assets, see “Non-GAAP Financial Measures” located above within this management’s discussion and analysis. The increase was primarily due to an improvement in pre-provision net revenue.
Pre-provision net revenue to average assets (non-GAAP) was 1.28% and 1.02% (1) for the years ended December 31, 2025 and 2024, respectively. For more information on the calculation of pre-provision net revenue to average assets, see “Non-GAAP Financial Measures” located above within this management’s discussion and analysis. The increase was primarily due to an improvement in pre-provision net revenue.
As of December 31, 2024, the commercial and industrial portfolio was 15% of the total loan and lease portfolio indicative of a lower relative reserve, which is attributed to the shorter average duration of this portfolio and lower relative risk, specifically from the municipal portfolio. 39 Table of Contents As of December 31, 2024, the consumer portfolio comprised 13% of the total allowance for credit losses, unchanged from December 31, 2023.
As of December 31, 2025, the commercial and industrial portfolio was 18% of the total loan and lease portfolio indicative of a lower relative reserve, which is attributed to the shorter average duration of this portfolio and lower relative risk, specifically from the municipal portfolio. 36 Table of Contents As of December 31, 2025, the consumer portfolio comprised 10% of the total allowance for credit losses, down 3 percentage points from December 31, 2024.
The $9.0 million RACP grants will offset the total construction costs of the renovation and rehabilitation of the historic Scranton Electric Building. As of December 31, 2024, the Company incurred $6.2 million in costs for the corporate headquarters building in downtown Scranton which include planning, engineering, and architectural fees as well as interior demo and investigative work.
The $9.0 million RACP grants will offset the total construction costs of the renovation and rehabilitation of the historic Scranton Electric Building. As of December 31, 2025, the Company incurred $21.8 million in costs for the corporate headquarters building in downtown Scranton which included planning, engineering, and architectural fees as well as interior demolition and construction.
During the year ended December 31, 2024, residential mortgage loans with principal balances of $59.3 million were sold into the secondary market and the Company recognized net gains of $1.0 million, compared to $52.0 million and $0.9 million, respectively, during the year ended December 31, 2023. The Company retains mortgage servicing rights (MSRs) on loans sold into the secondary market.
During the year ended December 31, 2025, residential mortgage loans with principal balances of $65.7 million were sold into the secondary market and the Company recognized net gains of $1.0 million, compared to $59.3 million and $1.0 million, respectively, during the year ended December 31, 2024.
The portfolio had no adjustable-rate instruments as of December 31, 2024 and 2023. 29 Table of Contents The AFS securities were recorded with a net unrealized loss of $52.8 million and $51.6 million as of December 31, 2024 and 2023, respectively.
The portfolio had no adjustable-rate instruments as of December 31, 2025 and 2024. The AFS securities were recorded with a net unrealized loss of $36.4 million and $52.8 million as of December 31, 2025 and 2024, respectively.
On December 31, 2023, there were a total of 32 non-accrual loans to 26 unrelated borrowers with balances that ranged from less than $1 thousand to $1.3 million, or $3.3 million in the aggregate.
On December 31, 2025, there were a total of 24 non-accrual loans to 21 unrelated borrowers with balances that ranged from less than $1 thousand to $0.4 million, or $1.9 million in the aggregate.
Overview Net income recorded for the year ended December 31, 2024 was $20.8 million, or $3.60 diluted earnings per share, compared to $18.2 million, or $3.19 diluted earnings per share, for the year ended December 31, 2023.
Overview Net income recorded for the year ended December 31, 2025 was $28.2 million, or $4.89 earnings per share, ($4.86 diluted earnings per share) compared to $20.8 million, or $3.63 earnings per share, ($3.60 diluted earnings per share) for the year ended December 31, 2024.
As of December 31, 2024, total uninsured deposits were estimated to be $883.6 million, or 38% of total deposits. The estimate of uninsured deposits is based on the same methodologies and assumptions used for regulatory reporting requirements. The Company aggregates deposit products by taxpayer identification number and classifies them into ownership categories to estimate amounts over the FDIC insurance limit.
The estimate of uninsured deposits is based on the same methodologies and assumptions used for regulatory reporting requirements. The Company aggregates deposit products by taxpayer identification number and classifies them into ownership categories to estimate amounts over the FDIC insurance limit.
Correspondingly, when interest rates decline, the market values of the Company’s debt securities portfolio could be subject to market value increases. As of December 31, 2024, the Company had $287.1 million in public deposits, or 12% of total deposits.
Correspondingly, when interest rates decline, the market values of the Company’s debt securities portfolio could be subject to market value increases. 27 Table of Contents As of December 31, 2025, the Company had $266.2 million in public deposits, or 11% of total deposits.
The overall cost of interest-bearing liabilities was 2.60% for the twelve months ended December 31, 2024 compared to 1.93% for the twelve months ended December 31, 2023. The cost of funds increased 55 basis points to 1.99% for the twelve months ended December 31, 2024 from 1.44% for the same period of 2023.
The overall cost of interest-bearing liabilities was 2.49% for the twelve months ended December 31, 2025 compared to 2.60% for the twelve months ended December 31, 2024. The cost of funds decreased 5 basis points to 1.94% for the twelve months ended December 31, 2025 from 1.99% for the same period of 2024.
The Company’s FTE (non-GAAP measurement) net interest spread was 2.02% for the twelve months ended December 31, 2024, a decrease of 23 basis points from the 2.25% recorded for the same period of 2023.
The Company’s FTE net interest spread (non-GAAP measurement) was 2.30% for the twelve months ended December 31, 2025, an increase of 28 basis points from the 2.02% recorded for the same period of 2024.
When present, the portion of the allowance designated as unallocated is within the Company’s guidelines: 2024 2023 % of Category % of Category Total % of Total % of (dollars in thousands) Allowance Allowance Loans Allowance Allowance Loans Category Commercial real estate $ 8,943 45 % 42 % $ 8,835 47 % 39 % Commercial and industrial 2,345 12 15 1,850 10 15 Consumer 2,377 13 14 2,391 13 16 Residential real estate 5,989 30 29 5,694 30 30 Unallocated 12 - - 36 - - Total $ 19,666 100 % 100 % $ 18,806 100 % 100 % As of December 31, 2024, the commercial real estate loan portfolio comprised 45% of the total allowance for credit losses, down 2 percentage points from December 31, 2023.
When present, the portion of the allowance designated as unallocated is within the Company’s guidelines: 2025 2024 % of Category % of Category Total % of Total % of (dollars in thousands) Allowance Allowance Loans Allowance Allowance Loans Category Commercial real estate $ 8,806 44 % 43 % $ 8,943 45 % 42 % Commercial and industrial 2,731 14 18 2,345 12 15 Consumer 2,173 10 11 2,377 13 14 Residential real estate 6,404 32 28 5,989 30 29 Unallocated 54 - - 12 - - Total $ 20,168 100 % 100 % $ 19,666 100 % 100 % As of December 31, 2025, the commercial real estate loan portfolio comprised 44% of the total allowance for credit losses, down 1 percentage point from December 31, 2024.
BOLI is classified as a non-interest earning asset. Increases or decreases in the cash surrender value are recorded as components of non-interest income. The BOLI is profitable from the appreciation of the cash surrender values of the pool of insurance and its tax-free advantage to the Company.
Increases or decreases in the cash surrender value are recorded as components of non-interest income. The BOLI is profitable from the appreciation of the cash surrender values of the pool of insurance and its tax-free advantage to the Company. This profitability is used to offset a portion of current and future employee benefit costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by 7A is set forth at Item 7, under “Liquidity” and “Management of interest rate risk and market risk analysis,” contained within management’s discussion and analysis of financial condition and results of operations and incorporated herein by reference. 59 Table of Contents
Biggest changeITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by 7A is set forth at Item 7, under “Liquidity” and “Management of interest rate risk and market risk analysis,” contained within management’s discussion and analysis of financial condition and results of operations and incorporated herein by reference. 56 Table of Contents

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