📑 What This Document Is 📰

This is an 8-K filing (Current Report), which means Fidelity D & D Bancorp, Inc. is announcing major events to the public right away. Specifically, this report details the bank's unaudited, consolidated financial results for the three-month period ending March 31, 2026. In simple terms, it's the bank's quarterly report card, showing how much money they made and how healthy their books are.

👉 Key takeaway: The bank is reporting strong quarter-over-quarter growth in net income and earnings, driven largely by solid growth in its loan portfolio.

🏢 Who Is Fidelity D & D Bancorp? 🏦

Fidelity D & D Bancorp, Inc. operates through its subsidiary, The Fidelity Deposit and Discount Bank ("Fidelity Bank"). The bank has a long history of serving as a trusted financial advisor in the communities of Lackawanna, Luzerne, Lehigh, and Northampton Counties. They aren't just a teller service; they provide a full suite of services, including personal and commercial banking products, Wealth Management & Brokerage Services, and a dedicated Mortgage Center.

👉 Why it matters: The bank focuses heavily on community involvement, having provided over 6,190 hours of volunteer time and over $1.5 million in donations to local non-profits throughout 2025.

💬 Executive Commentary & Outlook 🤵

The bank's leadership used this filing to share a positive outlook, highlighting the underlying strengths and stable operational execution across their business units. Daniel J. Santaniello, President and Chief Executive Officer, stated, "Fidelity Bank reached quarter-end assets of $2.9 billion, delivering a 25% year-over-year increase in net income to $7.5 million and a 24% increase in diluted earnings per share."

👉 Why it matters: This commentary signals management's confidence. The CEO attributes the growth not just to market conditions, but also to the expertise and commitment of their bankers, suggesting operational talent is a key driver of future success.

📈 First Quarter Financial Highlights 🥇

The headline figures show clear, robust growth compared to the previous year. The bank’s net income for the quarter ended March 31, 2026, reached $7.5 million. This marks a significant improvement over the $6.0 million net income reported for the same period in 2025.

• Net Income: Increased to $7.5 million (Q1 2026), up from $6.0 million (Q1 2025).
• Diluted EPS (Earnings Per Share): Increased to $1.28 (Q1 2026), up from $1.03 (Q1 2025).

👉 Why it matters: The increase of $1.5 million (or 25%) in net income reflects improved operational performance and solid asset growth, which are the core metrics investors watch.

💰 Net Interest Income (NII) Growth 💵

This section covers the bank's main source of income: the spread between the interest they earn on loans and deposits, and the interest they pay out. Net Interest Income (NII) was $19.4 million for Q1 2026, a notable increase from the $17.0 million earned during Q1 2025.

• Interest Income Increase: Total interest income rose to $30.46 million (Q1 2026) from $28.31 million (Q1 2025). This was fueled by a $2.2 million increase in interest income, which was primarily driven by a $160.6 million increase in the average balance of interest-earning assets.
• Net Interest Spread: The bank's efficiency improved, with the FTE net interest spread rising to 2.50% in Q1 2026, up from 2.24% in Q1 2025.
• Interest Expense: While interest income climbed, the overall cost of interest-bearing liabilities decreased slightly, moving from 2.49% in Q1 2025 to 2.27% in Q1 2026.

👉 Why it matters: The increased net interest spread shows that the bank was able to earn significantly more on its assets (loans, investments) than it paid out on its liabilities (deposits), which is the core of banking profitability.

💸 Non-Interest Revenue and Expenses 🍎

The bank's profits are supplemented by revenue streams that aren't related to interest (non-interest income) and offset by associated costs (non-interest expenses).

• Non-Interest Income: This category saw a modest increase of $0.2 million, totaling $5.2 million (Q1 2026) compared to $5.0 million (Q1 2025). This was largely driven by increased fees from commercial loans with interest rate hedges ($0.4 million increase) and growth in wealth management revenue.
• Non-Interest Expenses: These costs rose by $0.6 million, reaching $15.2 million (Q1 2026) from $14.6 million (Q1 2025). The filing attributed this rise to increased salaries and benefits expenses, partly due to a higher number of bankers and associated incentive compensation.

🏦 Financial Position and Balance Sheet Health 🛡️

The balance sheet section provides a snapshot of what the bank owns (assets) versus what it owes (liabilities) as of March 31, 2026. The bank's total assets increased to $2.9 billion, up from $2.75 billion (Q1 2025).

• Asset Growth: The loan and leases portfolio was the biggest driver, growing significantly. However, total assets were partially offset by an $11.6 million decrease in the investment portfolio, mainly due to the sale of $5.8 million in available-for-sale securities and $5.1 million from paydowns.
• Deposit Growth: Total deposits grew to $2.58 billion (Q1 2026) from $2.47 billion (Q1 2025). The growth was specifically noted in interest-bearing deposits (like money market and checking accounts).
• Shareholders' Equity: Equity increased by $5.8 million to $244.7 million (Q1 2026) from $238.9 million (Q1 2025). This growth was supported by retained earnings from the quarter's net income, even after paying $2.5 million in cash dividends.

👉 Why it matters: The overall growth in deposits (liabilities) was used by the bank to fund the growth in its asset base, primarily its loan portfolio.

✅ Asset Quality and Capitalization 💎

These metrics are crucial indicators of the bank's risk profile and its stability. The bank reports very strong capitalization ratios, meaning it has a significant cushion of capital to absorb unexpected losses.

• Non-Performing Assets (NPAs): The total non-performing assets remained very low at $2.4 million (0.09% of total assets) as of March 31, 2026. This slight increase from $2.2 million the previous year is still minimal.
• Capital Strength: The bank's capital ratios are solid:
  • Total risk-based capital was 14.45% of risk-weighted assets (as of March 31, 2026).
  • Tier 1 risk-based capital was 13.33% of risk-weighted assets, showing the bank's immediate ability to cover risks.

👉 Why it matters: Low NPAs and high capital ratios signal that the bank's loan books are high quality and the institution is financially well-protected against potential downturns.

💼 Operating Infrastructure and Key Metrics 🛠️

The filing provides several detailed operational data points that give a granular view of the bank's performance and risk management.

• Loan Provisioning: The provision for credit losses on loans was $875 thousand (Q1 2026), up significantly from $455 thousand (Q1 2025). The bank explained this increase was directly due to significantly higher loan growth over the quarter, which is expected and prudent.
• Book Value per Share: The tangible book value per share reached $38.67 as of March 31, 2026, showing incremental growth in shareholder wealth compared to $37.88 the previous year.
• Investment Growth: The bank continues to grow its operational footprint, reporting 21 full-service offices across Lackawanna, Luzerne, Lehigh, and Northampton Counties.

🔬 Technical Accounting Notes (Non-GAAP/FTE) 📐

The filing includes detailed statements explaining its use of non-GAAP (Generally Accepted Accounting Principles) financial measures. These measures help readers understand the core business performance by removing one-time gains or losses.

• FTE (Fully-Taxable Equivalent) Adjustment: The bank adjusts its interest income to FTE to allow for a uniform comparison of yields. This ensures that the comparison between yield percentages is accurate, regardless of whether the interest is taxable or exempt.
• Efficiency Ratio: The bank calculated a non-GAAP efficiency ratio of 58.53% for Q1 2026. This metric measures how efficiently the bank spends its money—the lower the percentage, the better its cost control.
• Net Interest Income (FTE): The FTE net interest income was $20.19 million (Q1 2026), which is the adjusted number used to compare the core lending performance.

📞 Key Contacts and Resources ☎️

If readers have questions about these results, the bank provides clear contacts for follow-up:

• CEO: Daniel J. Santaniello (President and Chief Executive Officer)
• CFO: Salvatore R. DeFrancesco, Jr. (Treasurer and Chief Financial Officer)
• General Phone: 570-504-8035 (CEO) and 570-504-8000 (CFO).

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🧠 The Analogy 🧩

Think of Fidelity D & D Bancorp like a large, well-maintained water pump station. 💧 The incoming deposits and investment interest are the fresh water flowing in. The bank uses that water (deposits) to pump out water (loans) to the community. The higher the flow rate of that water, the more money (Net Income) the station generates. This quarter's report shows that, even with some maintenance costs (non-interest expenses), the pump station managed to increase its operational flow (loans and deposits), making it a very successful quarter.

🧩 Final Takeaway 🌟

Fidelity D & D Bancorp showed strong quarterly growth in revenue and earnings. The primary drivers were expanding loan activity and effective management of its interest spread, all while maintaining highly conservative capital and asset quality metrics.