Quarterly Financial Highlights

Dear Shareholders:

I am incredibly pleased to present the results for Dimeco, Inc. as of the fourth quarter 2025. Overall, 2025 was a very good year for the Company, including strong growth on the balance sheet, increased earnings and dividends as well as solid performance ratios. 

Net income of $16.6 million was an impressive 28% greater than last year while the efficiency ratio of 55.95% improved by 8.8%. Return on average assets ended the year at 1.47%, a 17.6% growth over last year while return on average equity was 14.35% which was 13.8% greater than 2024! Dividends of $1.71 per share versus $1.62 last year increased by 5.6%, reflecting our commitment to you.

Total assets of $1.2 billion increased $83.2 million or 7.7% from the fourth quarter of 2024. Loans and cash balances drove most of the asset growth year over year. Loan balances of $824.7 million at the end of the quarter were $49.4 million or 6.4% greater than December 31, 2024. Commercial and residential mortgages and consumer loans all showed increases which were offset with minor declines in business loans and other loans. Mortgages grew by $48.1 million while consumer loans expanded by $4.1 million. 

Cash and cash equivalents of $53.2 million were $35.2 million greater than at year end 2024. This was the result of management strategically using the Federal Home Loan Bank (FHLB) to secure funding at favorable rates in addition to selling low-yielding bonds in the fourth quarter, so those proceeds can be invested in higher yielding interest-bearing accounts, investment securities or to fund loan originations. As a result, the investment portfolio shows only a slight increase of $2 million or .9%, compared to the fourth quarter of 2024.

Deposit balances of $977.9 million were an increase of $66.9 million or 7.3% over the previous year. Noninterest bearing deposits grew by $27.1 million while interest-bearing deposits added $39.8 million. Personal and business noninterest bearing accounts continued to show increases over the previous year. Certificates of deposit (CD) specials are the main driver of interest-bearing increases, but certain business demand deposit accounts also produced growth while brokered CDs grew slightly from year end 2024.

Short-term borrowings increased by $17.2 million over December 31, 2024. Management borrowed from the FHLB at favorable rates to reinvest in higher rate asset accounts. Other borrowed funds decreased by $20.7 million or 44.6% as existing borrowings were paid down and no new borrowings were needed.

Stockholders’ equity increased by $18.4 million or 17.2% from December 31, 2024, to $125.4 million. Retained earnings accounted for $12.2 million of this growth while accumulated other comprehensive losses improved by $5.8 million. This improvement is due to the mark to market adjustment on our investment portfolio.

Interest income increased $8.3 million or 14.1% over the fourth quarter of 2024. Loan income and fees accounted for $5.6 million of this growth, investment income added $2 million and other interest income grew by $706 thousand primarily from interest-bearing deposits at the Federal Reserve. Interest expense of $21.7 million was $596 thousand or 2.8% greater than the same period last year. Deposits contributed $270 thousand of this greater expense due to the growth of CDs even while interest rates decreased. 

Short-term borrowings added $78 thousand of expense while other borrowed funds contributed $247 thousand. Non-interest income grew by $50 thousand. As mentioned above, management sold bonds in the fourth quarter to reinvest in higher earnings assets. This produced a loss of $682 thousand which was offset by increases in other categories. Non-interest expenses increased by $1.9 million or 6.7%, mostly due to salaries and employee benefits, computer software maintenance and certain other operating expenses. 

The provision for credit losses increased by $1.3 million to adjust the allowance required by our Current Estimated Credit Losses (CECL) calculation. This adjustment was primarily due to the growth in the loan portfolio and one larger loan relationship. Tax expense increased by $901 thousand as certain tax credits expired and due to increased income. As mentioned earlier, this resulted in a year-to-date net income of $16.6 million which was $3.6 million or 28% greater than December 31, 2024.

I hope you are as excited as we are with these results. The new year is just underway but rest assured that management will continue to guide Dimeco, Inc. by the same sound and prudent banking decisions that we always have. We thank you for your support and commitment and please take any opportunity to refer family and friends to Dimeco, Inc. I welcome your comments.