FDBC earnings rose 21% year over year in the third quarter of 2026, as stronger lending income and lower deposit costs outweighed higher operating expenses and credit-loss provisions. Fidelity D & D Bancorp, the parent of Fidelity Bank, announced unaudited net income of $8.9 million, or $1.53 per diluted share, on October 21 for the quarter ended September 30.
Key Takeaways
- Net interest income increased 18%, while the fully taxable-equivalent net interest margin widened to 3.30%.
- Fee income growth included wealth management gains, a property sale and a commercial loan prepayment penalty.
- Loan growth lifted credit-loss provisions, while short-term borrowings increased alongside deposits.
Table of Contents
- FDBC earnings benefit from lending growth and cheaper deposits
- Fee gains outpace rising staffing and technology costs
- Loan expansion raises provisions and funding needs
- Nine-month profit rises as capital growth trails assets
- Conclusion
FDBC earnings benefit from lending growth and cheaper deposits
Fidelity D & D Bancorp’s third-quarter 2026 results announcement showed diluted earnings per share rising from $1.27 a year earlier, when net income was $7.3 million. Chief Executive Officer Daniel J. Santaniello described the latest quarterly earnings as a record.
Net interest income increased $3.4 million, or 18%, from the third quarter of 2025. Average loans grew $237.3 million, and the fully taxable-equivalent loan yield increased four basis points. The average rate paid on interest-bearing deposits fell 29 basis points, more than offsetting the cost of higher average deposit balances.
Together, those changes widened the fully taxable-equivalent net interest margin by 35 basis points to 3.30%. This non-GAAP measure adjusts tax-exempt interest income to a taxable basis; the adjustment does not change reported GAAP net income.
| Item | Details |
|---|---|
| Tangible common equity ratio | 7.54% at September 30, 2026, versus 8.01% at December 31, 2025. |
| Tangible book value per share | $39.06 at September 30, 2026, versus $37.88 at December 31, 2025. |
| Total risk-based capital ratio | 14.10% at September 30, 2026. |
| Insured and collateralized deposits | Approximately 72% of total deposits at September 30, 2026. |
Fee gains outpace rising staffing and technology costs
Non-interest income increased 20% to $6.1 million. Wealth management revenue contributed $0.4 million of the increase, while a bank-property sale generated a $0.3 million gain. Commercial loan fee income rose $0.2 million, primarily because of a prepayment penalty recognized during the quarter.
Those items distinguish the broader wealth management improvement from income tied to individual transactions. They also helped offset non-interest expenses that rose 10% to $16.1 million.
Higher staffing costs added $0.6 million to expenses. Premises and equipment expenses increased $0.4 million, largely reflecting software, subscriptions and depreciation, while donations expense rose $0.3 million, primarily from a one-time charitable contribution. Despite the increase in costs, the efficiency ratio improved to 56.11% from 60.17%.
Loan expansion raises provisions and funding needs
The quarterly provision for credit losses on loans increased to $1.1 million from $200,000 a year earlier. The company attributed the increase primarily to loan portfolio growth, rather than reporting it as a deterioration in existing loans.
Total assets reached $3.0 billion at September 30, up $280.3 million from December 31, 2025. Net loans and leases grew $261.7 million over that period. Deposits increased $142.9 million, while short-term borrowings rose $132.7 million, showing that balance-sheet expansion also drew on borrowing.
Non-performing assets increased to $2.6 million from $2.2 million at year-end, but remained at 0.08% of total assets. Past-due and non-accrual loans declined to 0.19% of total loans from 0.26%.
Nine-month profit rises as capital growth trails assets
For the first nine months of 2026, net income rose 20% to $24.2 million, or $4.16 per diluted share, from $20.3 million, or $3.50 per share. Net interest income increased to $62.0 million from $53.4 million, supported by higher average loan balances and lower deposit rates.
Shareholders’ equity increased to $247.0 million from $238.9 million at year-end. However, tangible common equity fell as a share of total assets because tangible assets grew faster than tangible common equity. The company said it remained well capitalized.
Conclusion
FDBC earnings strengthened as lending growth and cheaper deposits improved profitability. Entering the fourth quarter, the key measures to watch are funding costs, credit-loss provisions and capital ratios as the bank manages its expanded loan portfolio.
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