Quarterly Financial Highlights

I am pleased to present the second quarter results for your Company.  The growth experienced since the beginning of the year continued.  Loan demand remained steady throughout the past twelve months and was funded mainly by the growth in certificates of deposit (CDs).  While interest rates are projected to start decreasing, albeit slowly, rates remain elevated, and the yield curve continues to be inverted. Management is focused on managing margin pressure, but it will take some time before the bank sees some relief.  In the meantime, actions are being taken to position the Company for future growth and earnings.

Total assets of $1.026 billion increased $57 million or 5.9% from the second quarter of 2023.  Loan balances of $746 million at the end of the quarter were $59.9 million or 8.7% greater than June 30, 2023. Real estate secured loans experienced the greatest increase of $54 million, while consumer loans grew by $5 million.  Investment securities remained flat year over year.  New bond purchases were made mostly in the second quarter to take advantage of higher rates prior to any decreases by the Federal Reserve.  These purchases were offset by principal payments received, maturities and sales.  In addition, the market value of these bonds increased by $2.9 million due to the mark to market adjustment requirement to the investment portfolio.     

Deposit balances of $874 million were an increase of $78.6 million or 9.9% over the previous year.  Growth was centered in CDs which increased $113.6 million over the same time last year.  Management continues to utilize brokered CDs at lower rates than borrowings available from the Federal Home Loan Bank of Pittsburgh (FHLB), which helps to stabilize our cost of funds.  The growth of funds in time deposits received from our CD specials continued as expected. 

Short-term borrowings decreased by $31 million or 83.9% over June 30, 2023, due to the shift described above to brokered CDs and the increased deposits from CD specials.  Also, management converted some overnight borrowings to fixed term borrowings at lower interest rates. To further reduce our interest rate risk, we match funded some loans, resulting in an increase to other borrowed funds by $3.3 million over last year. 

Stockholders’ equity grew by $9.4 million to $101.4 million as of June 30, 3024.  This increase was attributable to growth of $7.3 million in retained earnings as well as a decrease of $2.3 million in accumulated other comprehensive losses. 

Interest income for the six months of 2024 increased $5.8 million or 26.2% over the same period 2023. This increase was attributable to loan income.  Interest expense of $10 million was $4.4 million greater than the six months ended June 30, 2023.  The shift to CD specials was the main reason for this increase, along with a slight uptick in two other business deposit categories.  This increase was offset by a decrease in short-term borrowing expense of $1 million.  Non-interest income increased $337 thousand or 10.6%.  Non-interest expenses grew by $380 thousand or 2.8%.  The provision for credit losses increased by $681 thousand as our loan portfolio continues to grow and as required by our Current Estimated Credit Losses (CECL) calculation. Net income of $5.4 million was $444 thousand more than the same period of 2023.  This resulted in an annualized return on average assets of 1.08% and return on average equity of 10.96%. 

Please join me in welcoming our newest director, Michael Peifer, to the board!  Mr. Peifer joined the board in May and his diverse background in both the private and public sectors will serve your Company well. We look forward to his contributions.

As always, we thank you for your continued support and commitment.  Please take any opportunity to refer family and friends to Dimeco, Inc.  I welcome your comments.