Fidelity D & D Bancorp, Inc. reported unaudited net income of $8.9 million for the third quarter ended September 30, 2026, marking a record earnings period for the Scranton, Pennsylvania-based bank. The result translates to $1.53 per diluted share, up from $1.27 in the same quarter of 2025, driven primarily by higher net interest income and non-interest income.
Daniel J. Santaniello, President and Chief Executive Officer, stated that the bank generated these record earnings while total assets reached $3.0 billion. He attributed the performance to the focus of the bank's employees and the execution of strategic initiatives, including the opening of a new Corporate Center in downtown Scranton.
Net interest income for the quarter rose by $3.4 million, an 18% increase compared to the third quarter of 2025. This growth was fueled by a $237.3 million increase in average loan balances and a 4 basis point rise in the fully-taxable equivalent yield on loans. Funding costs also declined, with the average rate paid on interest-bearing deposits dropping by 29 basis points. This decrease more than offset the impact of a $76.4 million increase in average interest-bearing deposit balances. Consequently, the fully-taxable equivalent net interest margin expanded by 35 basis points to 3.30%.
Non-interest income climbed by $1.0 million, or 20%, to reach $6.1 million for the quarter. The increase included $0.4 million from higher wealth management revenue and a $0.3 million gain on the sale of bank property. Commercial loan fee income also contributed an additional $0.2 million, largely due to a prepayment penalty recognized during the period.
Expenses rose alongside revenue, with non-interest expenses increasing by $1.5 million, or 10%, to $16.1 million from $14.6 million in the prior year period. The bank cited added salaries and benefits of $0.6 million as a primary driver, reflecting higher staffing levels to support business growth. Premises and equipment expenses increased by $0.4 million due to software, subscriptions, and depreciation costs, while donations expense rose by $0.3 million following a one-time charitable contribution.
Despite the higher spending, the efficiency ratio improved to 56.11% from 60.17% in the prior-year period, indicating improved operating leverage. The provision for credit losses on loans was $1.1 million for the quarter, compared to a $200 thousand provision in the same period of 2025. The bank noted that this increase primarily reflected growth in the loan portfolio.
For the nine months ended September 30, 2026, Fidelity D & D Bancorp reported net income of $24.2 million, or $4.16 per diluted share, compared to $20.3 million, or $3.50 per diluted share, for the same period in 2025. This represents a $3.9 million, or 20%, year-over-year increase in net income.