Dear Shareholders:
I am pleased to present the Dimeco, Inc. 2024 annual report, highlighting significant achievements and a steadfast commitment to our core values. The year commenced with resounding success, as Dimeco achieved the significant milestone of surpassing $1 billion in total assets within the first quarter. This accomplishment provided a solid foundation for continued growth throughout the year. Management remained steadfast in its focus, despite navigating a dynamic economic landscape, delivering robust results as outlined in this report.
Total assets at year-end were $1.08 billion, an increase of $90 million or 9.1% over 2023. Cash and cash equivalents grew year-over-year by $9.3 million due to higher balances in an interest-bearing account at the Federal Reserve Bank (Fed) and to enhance on balance sheet liquidity. Loan growth of $52.9 million was 7.3% greater than last year and ended the year at $775 million. Mortgages, both residential and commercial, showed the greatest increase of $51.3 million. Consumer loans ended the year at $31 million, which was $7.6 million or 32.7% more than 2023. This uptick was due to new originations and loan purchases. The allowance for credit losses ended the year at $11.1 million. The investment portfolio increased by $29.7 million or 15.1% over prior year. Management strategically purchased bonds throughout the year, but mainly in the second quarter before any rate cuts from the Fed, thus securing investments that provide higher yields for their duration.
Deposit balances of $911 million grew by $84.5 million or 10.2% over last year. Growth was in interest-bearing deposits which increased by $85.7 million or 13.2%. This growth was offset by a slight decline in non-interest-bearing deposits of $1.2 million. The shift from demand and savings to certificates of deposit (CDs) continued throughout 2024. CD balances of $373 million increased by $100.4 million. Most of this growth came from CD specials, however, public funds increased by $11.5 million and brokered CDs grew by $8.3 million. Deposit strategies will continue to be a focus for the Asset Liability Committee.
Short-term borrowings decreased by $15.7 million over the previous year. During the fourth quarter of 2024, $19.3 million of overnight borrowings were repositioned to lower interest rate, term borrowings. As a result, other borrowed funds increased by $11.8 million or 34.3%. The remaining difference was due to normal payment amortization and maturities.
Stockholders’ equity increased by $8.4 million from December 31, 2023, to $107 million. $12.9 million of this growth was from net income, which was offset by dividends paid of $4.1 million. Year- to-date dividends increased by 5.2% to $1.62 per share which equates to a dividend yield of over 4%. Accumulated other comprehensive losses slightly increased by $688 thousand or 4.3%. While these losses have a negative effect on the tangible book equity, they do not affect the regulatory capital calculations. Dimeco, Inc.’s capital remains above the regulatory requirements to be considered well capitalized.
Interest income of $58.8 million was $10.6 million higher than 2023 mainly due to loan income. Both the portfolio growth and some repricing of lower variable rate loans contributed to this increase. Total interest expense climbed by $6.8 million or 47.4% from last year. Deposit interest was $8.2 million greater, with $7.7 million of that added expense attributed to CDs. This resulted in a net interest income of $37.8 million which was $3.8 million greater than 2023. The provision for credit losses was $495 thousand greater than the previous year. Non-interest income of $7.5 million was $810 thousand or 12.1% higher than last year. Brokerage commissions contributed $359 thousand to this growth while gains on mortgages held for sale added $161 thousand and service charge income provided $181 thousand. Noninterest expense of $28.1 million was $1.3 million greater than prior year. Salaries and employee benefits were the largest components of this increase at $920 thousand. Higher healthcare costs along with salary adjustments were the main categories affecting this expense. The efficiency ratio ended the year at 61.37%, which was a decrease of 5.6% over 2023, showing noticeable improvement. Management continues to strive to enhance the bank’s performance by researching cost containment and revenue enhancement possibilities. Due to the higher income, tax expense increased by $674 thousand to $2.9 million. Net income for the year climbed by $2.1 million or 19.5% to $12.9 million. This resulted in a return on average assets (ROAA) of 1.25% and a return on average equity (ROAE) of 12.61%! We are very proud to share these results with you.
Additionally, over the past year, we have made substantial strides in fortifying our operational foundation including significant advancements in strengthening our infrastructure, enhancing cybersecurity measures, and modernizing technology. Our investments in infrastructure have improved system reliability and scalability, enabling us to meet growing demands with efficiency. Cybersecurity is always a priority to us, and we continue to implement technologies and initiative-taking strategies to protect bank and customer assets and data from emerging threats. We upgraded operational technology to streamline processes, improve performance, and ensure seamless integration across platforms. These initiatives underscore our unwavering commitment to innovation, resilience, and delivering excellence to our internal and external stakeholders.
As ever, we remain dedicated to serving the needs of our local community, supporting non-profit and philanthropic organizations, while fostering financial literacy among our customers, communities, and especially young adults. During 2024, through the Pennsylvania Educational Improvement Tax Credit (EITC) program, The Dime Bank made donations and provided funding totaling $370,000 to thirty-nine organizations with educational programs that support students and individuals throughout our communities in Wayne, Pike, and Lackawanna counties. Additionally, the bank participated in several Pennsylvania Neighborhood Assistance Programs providing funds totaling $185,000 for projects that help to provide affordable housing, beautifying our communities, restoring and rebuilding a pre-K center, and assisting with the early stages of constructing a new YMCA. The bank also contributed over $225,000 in donations and giveaways to area nonprofit organizations with our employees volunteering countless hours to assist them. In 2024, The Dime Bank received an “Outstanding” Community Reinvestment Act (CRA) rating from the Federal Deposit Insurance Corporation (FDIC). This top rating recognizes the bank’s significant contributions to our local community through lending, investments, and community development activities. This outstanding rating is a testament to our dedication to serving the needs of our community. By providing access to credit, investing in local businesses, and supporting community development initiatives, the bank has made a positive impact on the lives of our customers and neighbors.
In early 2024, Henry M. Skier transitioned to director emeritus after 42 years of dedicated service to our Board of Directors. Throughout his distinguished tenure, Henry actively participated in various committees, significantly contributing to the bank's strategic direction and sound governance. We are grateful for his continued guidance as director emeritus. We cannot fully express the utmost appreciation we have for Henry and the positive impact he had through the years. We wish him the best in his future pursuits.
We also welcomed two new members to our Board of Directors: Lorraine Collins and Michael Peifer. Lorraine's experience in real estate and exceptional management skills are a valuable addition to our existing member expertise. Her unwavering commitment to community service is evident in her passion and dedication. Michael’s background in the private financial sector, his successful experience as a small business owner, and his current advisory role coupled with his in-depth understanding of state government provide invaluable insights and a unique perspective to our Board of Directors. We are excited for their participation and contributions to the board.
As we move into 2025, we are committed to sustainable growth, operational excellence, and delivering exceptional value to our shareholders, customers, and community. We thank you for your continued trust and support and encourage you to recommend us to your family, friends, and community members. We look forward to building a stronger future together. Please feel free to reach out to me with comments or questions.
Sincerely,
Peter Bochnovich
President & Chief Executive Officer
Consolidated Financial Highlights 2024
(amounts in thousands, except per share data)