Fidelity D & D Bancorp, Inc. Reports First Quarter 2013 Financial Results

DUNMORE, Pa., May 1, 2013 /PRNewswire/ -- Fidelity D & D Bancorp, Inc., (OTC Bulletin Board: FDBC), parent company of The Fidelity Deposit and Discount Bank, announced net income for the quarter ended March 31, 2013 of $1.4 million, an improvement of $137 thousand, or 11%, compared to $1.3 million for the first quarter of 2012.  Net interest income growth plus improvement in gains from loan sales, service charges and interchange fees within other income categories, along with a lower provision for loan losses, more than offset the higher amounts of loan collection, foreclosed property, salary and benefits, and advertising expenditures incurred, when compared to the prior year quarter.  Earnings per share on a diluted basis for the quarter were $0.60 and $0.56 for the three months ended March 31, 2013 and 2012, respectively.

"Fidelity is very pleased with the financial results of the 1st quarter of 2013," stated Daniel J. Santaniello, President and Chief Executive Officer.  "The strong financial results are reflective of the Bank's continued strategic focus on building customer relationships and acquiring new customers. In addition, Management's commitment to enhancing asset quality continued to produce improvement in asset quality metrics.  Our strong capital position will enable us to invest in meeting our customer's needs as we remain committed to the execution of our strategic plan."

Net interest income increased $119 thousand, or 2%, to $5.2 million for the quarter ended March 31, 2013, from $5.1 million recorded during the first quarter of 2012.  Net interest income earned was higher in first quarter 2013 over the same period in 2012, despite the decline in yield on interest earning assets.  The Company experienced lower interest costs from carrying less interest-bearing liabilities, which was replaced with the growth of non-interest bearing deposits.  This along with a $36 million larger loan portfolio enhanced the net interest margin by 11 basis points to 3.84% for the first quarter of 2013, compared to 3.73% a year earlier for the same 2012 quarter.

A provision for loan loss of $550 thousand was recorded during the first quarter of 2013 compared to $700 thousand required for the same 2012 period. The provision for loan loss funded the allowance for loan losses for not only loan growth, but also reinforces it for the potential credit risks that still exist from an uncertain local economic environment.  This was done even in light of the overall asset quality improvement stemming from a $6 million reduction in non-performing assets over the past year.  The allowance for loan losses was at 1.83% of total loans at March 31, 2013, down from the charge-offs taken and the loan growth booked, when compared to the 1.97% of total loans at March 31, 2012.

Total other income recorded for the quarter ended March 31, 2013 was $2.0 million compared to $2.1 million for the same quarter in 2012.  The decrease was primarily from $135 thousand less gains from securities sold, $61 thousand less loan service charges and $22 thousand lower trust and financial services fees realized during 2013.  These were offset by growth attributed to a $109 thousand increase in gains from loans sold and a combined increase of $74 thousand from additional deposit service charge fees, rental income and interchange fees recognized within other income during 2013.

Total other operating expense increased by $132 thousand, or 3%, to $4.8 million from $4.7 million for the quarters ended March 31, 2013 and 2012, respectively.  The other operating expenses primarily increased from $117 thousand more salaries and benefits cost, $100 thousand additional advertising and marketing expense, $74 thousand higher loan collection expenses and $71 thousand added costs from carrying other real estate owned.

The Company's assets increased $6.6 million to total $608.2 million at March 31, 2013 compared to the $601.5 million of total assets at December 31, 2012.  This asset growth resulted from $15.8 million, or 4%, growth in net loans, offset by the $8.5 million reduction in loans held-for-sale and $1.5 million fewer securities, funded from the $5.5 million increase in short-term borrowings with repurchase customers plus a $0.8 million increase in shareholders' equity.

Fidelity D & D Bancorp, Inc. serves Lackawanna and Luzerne Counties through The Fidelity Deposit and Discount Bank's 11 community banking offices.  The Bank's deposits are insured by the Federal Deposit Insurance Corporation up to the full extent permitted by law.

Forward-looking statements

Certain of the matters discussed in this Quarterly Report on Form 10-Q may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.  The words "expect," "anticipate," "intend," "plan," "believe," "estimate," and similar expressions are intended to identify such forward-looking statements.

The Company's actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation:

  • the effects of economic deterioration and the prolonged economic malaise on current customers, specifically the effect of the economy on loan customers' ability to repay loans;
  • the costs and effects of litigation and of unexpected or adverse outcomes in such litigation;
  • the impact of new laws and regulations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the regulations promulgated there under;
  • possible impacts of the capital and liquidity requirements proposed by the Basel III standards and other regulatory pronouncements, regulations and rules;
  • governmental monetary and fiscal policies, as well as legislative and regulatory changes;
  • the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters;
  • the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest rate protection agreements, as well as interest rate risks;
  • the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet;
  • technological changes;
  • acquisitions and integration of acquired businesses;
  • the failure of assumptions underlying the establishment of reserves for loan losses and estimations of values of collateral and various financial assets and liabilities;
  • volatilities in the securities markets;
  • slow economic conditions;
  • acts of war or terrorism; and
  • disruption of credit and equity markets.

For more information please visit our investor relations web site located through www.bankatfidelity.com.

 

 FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Balance Sheets

(dollars in thousands)




At Period End:

March 31, 2013

December 31, 2012

Assets



   Total cash and cash equivalents

$                      20,730

$                     21,846

   Investment securities

99,496

100,730

   Federal Home Loan Bank Stock

2,238

2,624

   Loans and leases

450,677

444,101

   Allowance for loan losses

(8,236)

(8,972)

   Premises and equipment, net

13,876

14,127

   Life insurance cash surrender value

10,146

10,065

   Other assets

19,244

17,004




      Total assets

$                    608,171

$                   601,525




Liabilities



   Non-interest-bearing deposits

$                    122,855

$                   126,035

   Interest-bearing deposits

391,611

388,625

       Total deposits

514,466

514,660

   Short-term borrowings

13,593

8,056

   Long-term debt

16,000

16,000

   Other liabilities

4,333

3,863

      Total liabilities

548,392

542,579




   Shareholders' equity

59,779

58,946




      Total liabilities and shareholders' equity

$                    608,171

$                   601,525







Average Year-To-Date Balances:

March 31, 2013

December 31, 2012

Assets



   Total cash and cash equivalents

$                      29,939

$                     37,022

   Investment securities

104,582

112,712

   Loans and leases, net

441,632

418,287

   Premises and equipment, net

14,042

13,943

   Other assets

27,761

26,522




      Total assets

$                    617,956

$                   608,486




Liabilities



   Non-interest-bearing deposits

$                    130,864

$                   111,458

   Interest-bearing deposits

390,113

406,948

       Total deposits

520,977

518,406

   Short-term borrowings and long-term debt

33,616

29,794

   Other liabilities

3,811

3,390

      Total liabilities

558,404

551,590




   Shareholders' equity

59,552

56,896




      Total liabilities and shareholders' equity

$                    617,956

$                   608,486




FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Statements of Income

(dollars in thousands)



Three Months Ended




Mar. 31, 2013

Mar. 31, 2012




Interest income






Loans and leases

$ 5,469

$ 5,416




Securities and other

499

636










Total interest income

5,968

6,052










Interest expense






Deposits

515

684




Borrowings and debt

220

254










Total interest expense

735

938










Net interest income

5,233

5,114










Provision for loan losses

550

700




OTTI - credit losses

-

105




Other income

2,033

2,056




Other expenses

4,845

4,713




Provision for income taxes

477

395




Net income

$ 1,394

$ 1,257










 


Three Months Ended


Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Interest income






Loans and leases

$ 5,469

$ 5,455

$ 5,420

$ 5,408

$ 5,416

Securities and other

499

522

554

583

636







Total interest income

5,968

5,977

5,974

5,991

6,052







Interest expense






Deposits

515

553

585

617

684

Borrowings and debt

220

221

219

221

254







Total interest expense

735

774

804

838

938







Net interest income

5,233

5,203

5,170

5,153

5,114







Provision for loan losses

550

1,250

700

600

700

OTTI - credit losses

-

-

-

31

105

Other income

2,033

1,818

1,868

1,903

2,056

Other expenses

4,845

4,594

4,453

4,678

4,713

Provision for income taxes

477

248

486

430

395

Net income

$ 1,394

$ 929

$ 1,399

$ 1,317

$ 1,257







 

 FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Balance Sheets

(dollars in thousands)







At Period End:

Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Assets






   Total cash and cash equivalents

$           20,730

$           21,846

$           45,622

$           22,791

$           65,681

   Investment securities

99,496

100,730

103,135

110,809

115,367

   Federal Home Loan Bank Stock

2,238

2,624

3,019

3,339

3,514

   Loans and leases

450,677

444,101

430,914

426,118

422,272

   Allowance for loan losses

(8,236)

(8,972)

(8,142)

(8,151)

(8,320)

   Premises and equipment, net

13,876

14,127

14,270

13,686

13,942

   Life insurance cash surrender value

10,146

10,065

9,984

9,901

9,819

   Other assets

19,244

17,004

16,645

17,243

17,005







      Total assets

$         608,171

$         601,525

$         615,447

$         595,736

$         639,280







Liabilities






   Non-interest-bearing deposits

$         122,855

$         126,035

$         114,653

$         110,283

$         129,041

   Interest-bearing deposits

391,611

388,625

409,467

401,787

419,124

       Total deposits

514,466

514,660

524,120

512,070

548,165

   Short-term borrowings

13,593

8,056

14,069

8,106

17,238

   Long-term debt

16,000

16,000

16,000

16,000

16,000

   Other liabilities

4,333

3,863

2,705

2,997

2,900

      Total liabilities

548,392

542,579

556,894

539,173

584,303







   Shareholders' equity

59,779

58,946

58,553

56,563

54,977







      Total liabilities and shareholders' equity

$         608,171

$         601,525

$         615,447

$         595,736

$         639,280













Average Quarterly Balances:

Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Assets






   Total cash and cash equivalents

$           29,939

$           27,674

$           32,254

$           32,037

$           56,277

   Investment securities

104,582

107,021

111,112

118,721

114,076

   Loans and leases, net

441,632

426,040

423,250

416,755

406,962

   Premises and equipment, net

14,042

14,266

14,132

13,855

13,516

   Other assets

27,761

26,662

26,938

26,680

25,801







      Total assets

$         617,956

$         601,663

$         607,686

$         608,048

$         616,632







Liabilities






   Non-interest-bearing deposits

$         130,864

$         117,025

$         111,781

$         109,785

$         107,175

   Interest-bearing deposits

390,113

393,319

407,335

411,088

416,195

       Total deposits

520,977

510,344

519,116

520,873

523,370

   Short-term borrowings and long-term debt

33,616

28,527

27,616

27,954

35,117

   Other liabilities

3,811

3,549

3,390

3,266

3,355

      Total liabilities

558,404

542,420

550,122

552,093

561,842







   Shareholders' equity

59,552

59,243

57,564

55,955

54,790







      Total liabilities and shareholders' equity

$         617,956

$         601,663

$         607,686

$         608,048

$         616,632







 

FIDELITY D & D BANCORP, INC.

Selected Financial Ratios and Other Data






Three Months Ended


Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Selected returns and financial ratios






   Diluted earnings per share

$              0.60

$               0.40

$              0.61

$               0.57

$              0.56

   Dividends per share

$              0.25

$               0.25

$              0.25

$               0.25

$              0.25

   Yield on interest-earning assets (FTE)

4.36%

4.41%

4.36%

4.41%

4.39%

   Cost of interest-bearing liabilities

0.70%

0.73%

0.74%

0.77%

0.84%

   Net interest spread

3.66%

3.68%

3.62%

3.64%

3.55%

   Net interest margin

3.84%

3.86%

3.79%

3.81%

3.73%

   Return on average assets

0.91%

0.61%

0.92%

0.87%

0.82%

   Return on average equity

9.49%

6.24%

9.67%

9.47%

9.23%

   Efficiency ratio

66.17%

64.44%

61.74%

64.54%

62.89%

   Expense ratio

1.92%

1.88%

1.69%

1.84%

1.74%













Other financial data

Three Months Ended


Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

   Book value per share

$            25.52

$             25.37

$            25.37

$             24.69

$            24.18

   Equity to assets

9.83%

9.80%

9.51%

9.49%

8.60%

   Allowance for loan losses to:






      Total loans

1.83%

2.02%

1.89%

1.91%

1.97%

      Non-accrual loans

0.85x

0.74x

0.65x

0.60x

0.65x

   Non-accrual loans to total loans

2.16%

2.73%

2.89%

3.16%

3.04%

   Non-performing assets to total assets

2.47%

2.94%

2.72%

3.70%

3.32%







SOURCE Fidelity D & D Bancorp, Inc.



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