Quarterly Financial Highlights

As the third quarter ends, I am excited to present the results for Dimeco, Inc.  As you read the letter, you will see that loan demand has remained strong all year.  Deposits continue to grow, especially related to certificates of deposit (CDs).  Net income increased 28.8% over the same time last year, resulting in a return on average assets of 1.21% and a return on average equity of 12.29%.  The Federal Reserve (Fed) surprised most of us recently by lowering the target range for the federal funds rate by fifty basis points instead of the expected twenty-five basis points.  This rate cut is the start of some relief for borrowers that will also help alleviate some pressure on net interest margin for the bank.  More rate reductions are expected this year and through next year. Management will continue to pursue the actions that best align with your Company.

Total assets of $1.069 billion increased $82.8 million or 8.4% over the third quarter of 2023.  The largest component of this increase was loans which grew $64.3 million or 9.1% over September 30, 2023.  Commercial mortgages climbed by $51.4 million for both owner occupied and other categories.  Residential mortgages grew by $7.3 million through new originations as well as from the purchase of loans totaling $6.6 million.  Consumer loans increased by $4.1 million, organically and through purchased participations.  Investment securities balances of $222 million were $21.5 million greater than this time last year.  Management strategically bought bonds in 2024, mostly in the second and third quarters, prior to any rate decreases by the Fed, to lock in higher yields and extend duration where possible.  In addition, the market value of these bonds increased by $12.7 million due to the mark to market adjustment to the investment portfolio.    

Deposit balances of $882 million were an increase of $97.2 million or 12.4% over the same time last year.  While growth continued in CDs, which increased $115 million over September 30, 2023, noninterest-bearing deposits expanded by $8.8 million or 4.9%.  CD specials as well as brokered CDs continue to drive the growth in CDs.  Brokered CDs are used when rates are more attractive than borrowing from the Federal Home Loan Bank of Pittsburgh (FHLB). 

Short-term borrowings decreased by $29.7 million or 45.6% over September 30, 2023, due to the shift described above to brokered CDs and the increased deposits from CD specials. Other borrowed funds decreased by $4.7 million over the same time last year due to normal payment amortization which was offset by a $2.2 million borrowing used to match fund a commercial loan. 

Stockholders’ equity grew by $19.2 million to $108.1 million as of September 30, 3024.  This increase was attributable to growth of $8.9 million in retained earnings as well as a decrease of $10.1 million in accumulated other comprehensive losses. 

Interest income for the nine months of 2024 increased $8.7 million or 25.3% over the same period 2023.  Most of this increase was attributable to loan income, which contributed $8.3 million of this growth due to higher loan balances, elevated interest rates and the payoff of a troubled debt.  Interest expense of $15.4 million was $5.7 million greater than the nine months ended September 30, 2023.  The shift to CD specials and brokered CDs was the main reason for this increase, along with a slight uptick in three other business deposit categories.  This increase was offset by a decline in short-term borrowing expense of $1.5 million.  Non-interest income increased $680 thousand or 13.8%.  Non-interest expenses grew by $411 thousand or 2%.  The provision for credit losses increased by $502 thousand as our loan portfolio continues to grow and as required by our Current Estimated Credit Losses (CECL) calculation.  Net income of $9.3 million was $2.1 million more than last year at this time. 

I look forward to the fourth quarter of 2024 and the opportunities that lie ahead for us.  Let us hope that the momentum from the first three quarters of the year continues for the remainder of the year.  As always, we thank you for your continued support and commitment.  Please take every opportunity to refer family and friends to Dimeco, Inc.  I welcome your comments.