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

DUNMORE, Pa., July 31, 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 June 30, 2013 of $1.5 million, an $0.2 million, or 15%, increase compared to the same 2012 quarter.  Earnings improvement occurred by maintaining the level of net interest income from loan growth, while producing more other income and incurring less operating expenses over the previous year's second quarter.  The added revenue improved the return on average assets (ROA) to 1.00% for the second quarter of 2013 compared to 0.87% for the same 2012 quarter.  Earnings per share on a diluted basis were $0.64 and $0.57 for the three months ended June 30, 2013 and 2012, respectively.

"We are all very pleased with the results of the second quarter of 2013 which are a direct reflection of management's continued focus on and execution of its strategic plan.  Asset quality showed a marked improvement while also achieving solid loan growth," stated Daniel J. Santaniello, President and Chief Executive Officer.  "Through a disciplined approach, both margin and expenses remained constant during these economic conditions while, revenue increased primarily from diversifying non-interest income sources."

Net income for the six months ended June 30, 2013 was $2.9 million, an increase of $0.3 million, or 13%, compared to net income of $2.6 million for the six months ended June 30, 2012. The current year-to-date period earnings improvement occurred from producing more revenue, through increased net interest income and other income, which more than off-set higher provision for loan losses, while holding other expenses flat compared to the prior year-to-date period.  ROA was 0.96% for the six months ended June 30, 2013 compared to 0.85% for the same 2012 period.  Earnings per share were $1.24 and $1.13 for the six months ended June 30, 2013 and 2012, respectively.

The Company's assets increased $13.7 million, or 2%, to total $615.2 million at June 30, 2013 from $601.5 million at December 31, 2012.  The growth resulted primarily from adding $27.1 million in net loan balances by deploying excess cash balances, sold loans and investment portfolio run-off of $9.2 million, $5.2 million and $4.2 million, respectively, plus $4.9 million in deposit growth during the first half of 2013.

Net interest income was preserved at $5.2 million for the quarters ended June 30, 2013 and 2012.  The redeployment of lower yielding cash and securities run-off into $34.7 million average balance loan growth while maintaining average balance of earning assets mitigated the effect lower interest rates had on interest income earnings.  This coupled with the $13.0 million increase in non-interest bearing deposits and the interest expense savings from the $20.7 million reduction in interest-bearing deposits produced favorable results to stop net interest income erosion.  As a result, net interest income expanded $27 thousand, or 1% in the second quarter of 2013 compared to the year ago period.  This resulted from an improved net interest margin of 3.84% for the second quarter of 2013 compared to 3.81% for same 2012 period.

Net interest income increased $146 thousand, or 1%, to $10.4 million for the six months ended June 30, 2013 from $10.3 million recorded during the same period of 2012.  Net interest margin was 3.84% during the first half of 2013 compared to 3.77% during the first half of 2012, an improvement of 7 basis points from lowering rates on interest-bearing liabilities by 10 basis points but, more so, the redeployment within average earning assets base, stemming from the average balance growth of $34.7 million in loans.

The provision for loan losses was $600 thousand for both the second quarter ending June 30, 2013 and 2012.  Provision for loan losses was $1.2 million for the six months ending June 30, 2013, as compared to $1.3 million for the same 2012 period.  The allowance for loan losses was 1.78% of total loans at June 30, 2013, down from 1.91% at June 30, 2012 due to both charge-offs realized and pay-offs received that reduced the overall level of non-performing loans.

Total other income recorded for the quarter ended June 30, 2013 was $2.1 million compared with $1.9 million for the same quarter in 2012.  The increase in other income was primarily due to service charges and fee collection improvement from reoccurring traditional banking services, partially offset by a $44 thousand reduction in total gains recognized from the sale of loans.

Total other income for the six months ended June 30, 2013 was $4.1 million compared to $4.0 million for the same period in 2012.  The revenue increase in the comparative periods resulted primarily from reoccurring banking service charges and fees, including $65 thousand more gains from the sale of loans, partially reduced by the $133 thousand lower amount of total gains recognized from investment securities for the six months ended June 30, 2013 compared to the same 2012 six month period.

Total other operating expenses were $4.6 million compared to $4.7 million for the quarters ending June 30, 2013 and 2012, respectively.  The other operating expenses declined primarily from a $57 thousand lower loss on loan reacquisition, $55 thousand fewer collection and ORE costs, $37 thousand less in professional services, and a $36 thousand refund from a successful sales-tax appeal, partially off-set by $128 thousand more salary and benefit expenses recognized during the second quarter 2013.

Total other operating expenses were $9.5 million each for the six months ending June 30, 2013 and 2012.  The current period included $245 thousand more salary and benefit expenses, $72 thousand additional advertising and marketing costs and $87 thousand greater collection and ORE costs, almost off-set by $94 thousand less in professional services, $44 thousand lower premises and equipment expenses and the one-time $236 thousand long-term debt prepayment fee that only incurred in 2012.

Fidelity D & D Bancorp, Inc. serves Lackawanna and Luzerne Counties through The Fidelity Deposit and Discount Bank's 11 community banking office locations, including wealth management assistance through providing fiduciary activities with the Bank's full trust powers; as well as offering a full array of asset management services.  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:

June 30, 2013

December 31, 2012

Assets



   Total cash and cash equivalents

$                      15,266

$                     21,846

   Investment securities

96,466

100,730

   Federal Home Loan Bank Stock

3,214

2,624

   Loans and leases

465,351

444,101

   Allowance for loan losses

(8,296)

(8,972)

   Premises and equipment, net

13,802

14,127

   Life insurance cash surrender value

10,231

10,065

   Other assets

19,141

17,004




      Total assets

$                    615,175

$                   601,525




Liabilities



   Non-interest-bearing deposits

$                    127,268

$                   126,035

   Interest-bearing deposits

392,255

388,625

       Total deposits

519,523

514,660

   Short-term borrowings

16,199

8,056

   Long-term debt

16,000

16,000

   Other liabilities

3,550

3,863

      Total liabilities

555,272

542,579




   Shareholders' equity

59,903

58,946




      Total liabilities and shareholders' equity

$                    615,175

$                   601,525







Average Year-To-Date Balances:

June 30, 2013

December 31, 2012

Assets



   Total cash and cash equivalents

$                      21,702

$                     37,022

   Investment securities

103,452

112,712

   Loans and leases, net

446,183

418,287

   Premises and equipment, net

13,939

13,943

   Other assets

28,103

26,522




      Total assets

$                    613,379

$                   608,486




Liabilities



   Non-interest-bearing deposits

$                    126,812

$                   111,458

   Interest-bearing deposits

390,253

406,948

       Total deposits

517,065

518,406

   Short-term borrowings and long-term debt

32,401

29,794

   Other liabilities

3,734

3,390

      Total liabilities

553,200

551,590




   Shareholders' equity

60,179

56,896




      Total liabilities and shareholders' equity

$                    613,379

$                   608,486




 

 


 


FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Statements of Income

(dollars in thousands)


Three Months Ended

Six Months Ended



Jun. 30, 2013

Jun. 30, 2012

Jun. 30, 2013

Jun. 30, 2012


Interest income






    Loans and leases 

$            5,456

$             5,408

$          10,925

$           10,824


    Securities and other  

456

583

955

1,219








       Total interest income 

5,912

5,991

11,880

12,043








 Interest expense 






    Deposits 

511

617

1,026

1,301


    Borrowings and debt 

221

221

441

475








       Total interest expense 

732

838

1,467

1,776








       Net interest income 

5,180

5,153

10,413

10,267








    Provision for loan losses 

600

600

1,150

1,300


    OTTI - credit losses 

-

31

-

136


    Other income 

2,051

1,934

4,119

4,028


    Other expenses 

4,606

4,709

9,487

9,460


    Provision for income taxes 

512

430

988

825


       Net income 

$            1,513

$             1,317

$            2,907

$             2,574























Three Months Ended


Jun. 30, 2013

Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Interest income






    Loans and leases 

$            5,456

$             5,469

$            5,455

$             5,420

$            5,408

    Securities and other  

456

499

522

554

583







       Total interest income 

5,912

5,968

5,977

5,974

5,991







 Interest expense 






    Deposits 

511

515

553

585

617

    Borrowings and debt 

221

220

221

219

221







       Total interest expense 

732

735

774

804

838







       Net interest income 

5,180

5,233

5,203

5,170

5,153







    Provision for loan losses 

600

550

1,250

700

600

    OTTI - credit losses 

-

-

-

-

31

    Other income 

2,051

2,068

1,866

1,893

1,934

    Other expenses 

4,606

4,880

4,642

4,478

4,709

    Provision for income taxes 

512

477

248

486

430

       Net income 

$            1,513

$             1,394

$               929

$             1,399

$            1,317







 

 FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Balance Sheets

(dollars in thousands)







At Period End:

Jun. 30, 2013

Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Assets






   Total cash and cash equivalents

$           15,266

$           20,730

$           21,846

$           45,622

$           22,791

   Investment securities

96,466

99,496

100,730

103,135

110,809

   Federal Home Loan Bank Stock

3,214

2,238

2,624

3,019

3,339

   Loans and leases

465,351

450,677

444,101

430,914

426,118

   Allowance for loan losses

(8,296)

(8,236)

(8,972)

(8,142)

(8,151)

   Premises and equipment, net

13,802

13,876

14,127

14,270

13,686

   Life insurance cash surrender value

10,231

10,146

10,065

9,984

9,901

   Other assets

19,141

19,244

17,004

16,645

17,243







      Total assets

$         615,175

$         608,171

$         601,525

$         615,447

$         595,736







Liabilities






   Non-interest-bearing deposits

$         127,268

$         122,855

$         126,035

$         114,653

$         110,283

   Interest-bearing deposits

392,255

391,611

388,625

409,467

401,787

       Total deposits

519,523

514,466

514,660

524,120

512,070

   Short-term borrowings

16,199

13,593

8,056

14,069

8,106

   Long-term debt

16,000

16,000

16,000

16,000

16,000

   Other liabilities

3,550

4,333

3,863

2,705

2,997

      Total liabilities

555,272

548,392

542,579

556,894

539,173







   Shareholders' equity

59,903

59,779

58,946

58,553

56,563







      Total liabilities and shareholders' equity

$         615,175

$         608,171

$         601,525

$         615,447

$         595,736













Average Quarterly Balances:

Jun. 30, 2013

Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Assets






   Total cash and cash equivalents

$           13,554

$           29,939

$           27,674

$           32,254

$           32,037

   Investment securities

102,335

104,582

107,021

111,112

118,721

   Loans and leases, net

450,684

441,632

426,040

423,250

416,755

   Premises and equipment, net

13,838

14,042

14,266

14,132

13,855

   Other assets

28,441

27,761

26,662

26,938

26,680







      Total assets

$         608,852

$         617,956

$         601,663

$         607,686

$         608,048







Liabilities






   Non-interest-bearing deposits

$         122,805

$         130,864

$         117,025

$         111,781

$         109,785

   Interest-bearing deposits

390,392

390,113

393,319

407,335

411,088

       Total deposits

513,197

520,977

510,344

519,116

520,873

   Short-term borrowings and long-term debt

31,199

33,616

28,527

27,616

27,954

   Other liabilities

3,657

3,811

3,549

3,390

3,266

      Total liabilities

548,053

558,404

542,420

550,122

552,093







   Shareholders' equity

60,799

59,552

59,243

57,564

55,955







      Total liabilities and shareholders' equity

$         608,852

$         617,956

$         601,663

$         607,686

$         608,048







 

FIDELITY D & D BANCORP, INC.

Selected Financial Ratios and Other Data






Three Months Ended


Jun. 30, 2013

Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

Selected returns and financial ratios






   Diluted earnings per share

$              0.64

$               0.60

$              0.40

$               0.61

$              0.57

   Dividends per share

$              0.25

$               0.25

$              0.25

$               0.25

$              0.25

   Yield on interest-earning assets (FTE)

4.37%

4.36%

4.41%

4.36%

4.41%

   Cost of interest-bearing liabilities

0.70%

0.70%

0.73%

0.74%

0.77%

   Net interest spread

3.67%

3.66%

3.68%

3.62%

3.64%

   Net interest margin

3.84%

3.84%

3.86%

3.79%

3.81%

   Return on average assets

1.00%

0.91%

0.61%

0.92%

0.87%

   Return on average equity

9.98%

9.49%

6.24%

9.67%

9.47%

   Efficiency ratio

61.90%

66.17%

64.44%

61.74%

64.54%

   Expense ratio

1.69%

1.92%

1.88%

1.69%

1.84%








Six Months Ended





Jun. 30, 2013

Jun. 30, 2012




   Diluted earnings per share

$              1.24

$               1.13




   Dividends per share

$              0.50

$               0.50




   Yield on interest-earning assets (FTE)

4.37%

4.40%




   Cost of interest-bearing liabilities

0.70%

0.80%




   Net interest spread

3.67%

3.60%




   Net interest margin

3.84%

3.77%




   Return on average assets

0.96%

0.85%




   Return on average equity

9.74%

9.35%




   Efficiency ratio

64.02%

63.72%




   Expense ratio

1.81%

1.80%










Other financial data

Three Months Ended


Jun. 30, 2013

Mar. 31, 2013

Dec. 31, 2012

Sep. 30, 2012

Jun. 30, 2012

   Book value per share

$            25.42

$             25.52

$            25.37

$             25.37

$            24.69

   Equity to assets

9.74%

9.83%

9.80%

9.51%

9.49%

   Allowance for loan losses to:






      Total loans

1.78%

1.83%

2.02%

1.89%

1.91%

      Non-accrual loans

1.24x

0.85x

0.74x

0.65x

0.60x

   Non-accrual loans to total loans

1.44%

2.16%

2.73%

2.89%

3.16%

   Non-performing assets to total assets

2.03%

2.47%

2.94%

2.72%

3.70%







 

SOURCE Fidelity D & D Bancorp, Inc.



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