2014

Fidelity D & D Bancorp, Inc. Reports Third Quarter 2012 Financial Results

DUNMORE, Pa., Oct. 24, 2012 /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 September 30, 2012 of $1.4 million, an increase of $72 thousand, or 5%, compared to the 2011 third quarter.  Progress in improving earnings occurred from producing further other income, which more than offset 2% lower net interest income and, more so, the additional provision for loan losses required over the previous year's third quarter to replenish the allowance for loan losses.  Earnings per share on a diluted basis for the quarter were $0.61 and $0.59 for the three months ended September 30, 2012 and 2011, respectively.

"We are pleased with the Third Quarter's results, which reflect steady growth in an number of key strategic areas, including loans, core deposits, and customer relationships," stated Daniel J. Santaniello, President and Chief Executive Officer.  "Our strategic plan focuses on offering a differentiated approach to customer service that centers on offering customers the financial products and services that meet their needs.  Through this approach we have been able to grow the Company's revenue."

Net income for the nine months ended September 30, 2012 was $4.0 million, an increase of $129 thousand, or 3%, compared to net income of $3.8 million for the same 2011 period. The current year-to-date period earnings improvement occurred from producing more other income, which more than off-set the declining net interest income and significantly higher loan losses, compared to the prior year-to-date period.  Earnings per share were $1.74 for each of the nine months ended September 30, 2012 and 2011.

The Company's assets grew $8.7 million, or 1%, to total $615.4 million at September 30, 2012 from $606.7 million at December 31, 2011.  The growth resulted primarily from a $18.5 million increase in non-interest bearing deposit balances, sheltering the $10.2 million decline within interest-bearing deposits, along with $4.6 million growth in repurchase agreements, a short-term borrowing, partially offsetting the $5.0 million long-term debt pay off during the first nine months of 2012.

Net interest income declined 2% to $5.2 million for the quarter ended September 30, 2012 from $5.3 million recorded during the same quarter of 2011.  The 26 basis point cost reductions, from lowering rates primarily on savings and certificate of deposit accounts, are no longer adequate to keep pace with either assets repricing to or new growth at lower current yields, both of which had reduced yield on earning assets by 29 basis points.  As a result, net interest income decreased $79 thousand in the third quarter of 2012 compared to the year ago period.  The decline in net interest income reduced net interest margin to 3.79% for the third quarter of 2012, compared to 3.85% for same 2011 period.

Net interest income decreased $363 thousand, or 2%, to $15.4 million for the nine months ended September 30, 2012 from $15.8 million recorded during the same period of 2011.  Net interest margin was 3.78% during the first nine months of 2012 compared to 3.97% during the first nine months of 2011, down 19 basis points from repricing activity, even though partially mitigated by a $15.0 million increase in average earning assets.

The provision for loan losses was $700 thousand and $500 thousand for the third quarter ending September 30, 2012 and 2011, respectively.  Provision for loan losses was $2.0 million for the nine months ending September 30, 2012, as compared to over $1.3 million for the same 2011 period.  The allowance for loan losses was 1.89% of total loans at September 30, 2012, down from 1.99% at September 30, 2011.

Total other income recorded for the quarter ended September 30, 2012 was $1.9 million compared with $1.5 million for the same quarter in 2011.  The increase in other income was primarily due to improving revenue by $339 thousand of added gains from the sale of loans, $43 thousand more fees from trust fiduciary activity and $40 thousand more service charges on loans for the quarter ended September 30, 2012, compared to the same 2011 period.

Total other income for the nine months ended September 30, 2012 was $5.8 million compared to $4.3 million for the same period in 2011.  The revenue increase in the comparative periods resulted primarily from mortgage banking activity producing $811 thousand more gains from the sale of loans and added $293 thousand to loan service charges, along with $235 thousand more gains from sale on investment securities, and $149 thousand added fees from trust fiduciary services for the nine months ended September 30, 2012 compared to the same 2011 period.

Total other operating expenses were maintained at $4.4 million for each of the quarters ending September 30, 2012 and 2011.

Total other operating expenses increased $290 thousand, or 2%, to $13.8 million for the nine months ending September 30, 2012 from $13.6 million in the same 2011 period. The other expense increase resulted primarily from the $236 thousand prepayment fee incurred on the early payoff of long-term debt in the 2012 year-to-date period.

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

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

Forward-Looking Statements

Certain of the matters discussed in this press release 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 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;
  • 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 Mid Penn's 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 and lease losses and estimations of values of collateral and various financial assets and liabilities;
  • volatilities in the securities markets;
  • deteriorating economic conditions
  • acts of war or terrorism; and
  • disruption of credit and equity markets.

 

 FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Balance Sheets

(dollars in thousands)




At Period End:

September 30, 2012

December 31, 2011

Assets



   Total cash and cash equivalents

$                      45,622

$                     52,165

   Investment securities

103,135

108,543

   Federal Home Loan Bank Stock

3,019

3,699

   Loans and leases

430,914

410,831

   Allowance for loan losses

(8,142)

(8,108)

   Premises and equipment, net

14,270

13,575

   Life insurance cash surrender value

9,984

9,740

   Other assets

16,645

16,297




      Total assets

$                    615,447

$                   606,742




Liabilities



   Non-interest-bearing deposits

$                    114,653

$                     96,155

   Interest-bearing deposits

409,467

419,647

       Total deposits

524,120

515,802

   Short-term borrowings

14,069

9,507

   Long-term debt

16,000

21,000

   Other liabilities

2,705

6,809

      Total liabilities

556,894

553,118




   Shareholders' equity

58,553

53,624




      Total liabilities and shareholders' equity

$                    615,447

$                   606,742







Average Year-To-Date Balances:

September 30, 2012

December 31, 2011

Assets



   Total cash and cash equivalents

$                      40,161

$                     50,325

   Investment securities

114,623

101,184

   Loans and leases, net

415,683

403,704

   Premises and equipment, net

13,835

14,188

   Other assets

26,475

26,926




      Total assets

$                    610,777

$                   596,327




Liabilities



   Non-interest-bearing deposits

$                    109,589

$                   102,441

   Interest-bearing deposits

411,524

406,568

       Total deposits

521,113

509,009

   Short-term borrowings and long-term debt

30,220

33,630

   Other liabilities

3,336

3,290

      Total liabilities

554,669

545,929




   Shareholders' equity

56,108

50,398




      Total liabilities and shareholders' equity

$                    610,777

$                   596,327




 

FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Statements of Income

(dollars in thousands)



Three Months Ended

Nine Months Ended



Sep. 30, 2012

Sep. 30, 2011

Sep. 30, 2012

Sep. 30, 2011


Interest income






    Loans and leases 

$            5,420

$             5,673

$          16,244

$           17,501


    Securities and other  

554

703

1,773

2,023








       Total interest income 

5,974

6,376

18,017

19,524








 Interest expense 






    Deposits 

585

852

1,886

2,909


    Borrowings and debt 

219

275

694

815








       Total interest expense 

804

1,127

2,580

3,724








       Net interest income 

5,170

5,249

15,437

15,800








    Provision for loan losses 

700

500

2,000

1,350


    OTTI - credit losses 

-

6

136

80


    Other income 

1,868

1,477

5,827

4,287


    Other expenses 

4,453

4,444

13,844

13,554


    Provision for income taxes 

486

449

1,311

1,260


       Net income 

$            1,399

$             1,327

$            3,973

$             3,843























Three Months Ended


Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Interest income






    Loans and leases 

$            5,420

$             5,408

$            5,415

$             5,405

$            5,673

    Securities and other  

554

583

637

674

703







       Total interest income 

5,974

5,991

6,052

6,079

6,376







 Interest expense 






    Deposits 

585

617

684

763

852

    Borrowings and debt 

219

221

254

274

275







       Total interest expense 

804

838

938

1,037

1,127







       Net interest income 

5,170

5,153

5,114

5,042

5,249







    Provision for loan losses 

700

600

700

450

500

    OTTI - credit losses 

-

31

105

165

6

    Other income 

1,868

1,903

2,056

1,651

1,477

    Other expenses 

4,453

4,678

4,713

4,491

4,444

    Provision for income taxes 

486

430

395

385

449

       Net income 

$            1,399

$             1,317

$            1,257

$             1,202

$            1,327








 

 FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Balance Sheets

(dollars in thousands)







At Period End:

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Assets






   Total cash and cash equivalents

$           45,622

$           22,791

$           65,681

$          52,165

$           76,126

   Investment securities

103,135

110,809

115,367

108,543

106,147

   Federal Home Loan Bank Stock

3,019

3,339

3,514

3,699

3,894

   Loans and leases

430,914

426,118

422,272

410,831

400,768

   Allowance for loan losses

(8,142)

(8,151)

(8,320)

(8,108)

(7,960)

   Premises and equipment, net

14,270

13,686

13,942

13,575

13,846

   Life insurance cash surrender value

9,984

9,901

9,819

9,740

9,660

   Other assets

16,645

17,243

17,005

16,297

19,213







      Total assets

$         615,447

$         595,736

$         639,280

$        606,742

$         621,694







Liabilities






   Non-interest-bearing deposits

$         114,653

$         110,283

$         129,041

$          96,155

$         100,668

   Interest-bearing deposits

409,467

401,787

419,124

419,647

424,929

       Total deposits

524,120

512,070

548,165

515,802

525,597

   Short-term borrowings

14,069

8,106

17,238

9,507

18,005

   Long-term debt

16,000

16,000

16,000

21,000

21,000

   Other liabilities

2,705

2,997

2,900

6,809

5,010

      Total liabilities

556,894

539,173

584,303

553,118

569,612







   Shareholders' equity

58,553

56,563

54,977

53,624

52,082







      Total liabilities and shareholders' equity

$         615,447

$         595,736

$         639,280

$        606,742

$         621,694













Average Quarterly Balances:

Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Assets






   Total cash and cash equivalents

$           32,254

$           32,037

$           56,277

$          53,814

$           64,037

   Investment securities

111,112

118,721

114,076

112,554

103,624

   Loans and leases, net

423,250

416,755

406,962

402,093

393,771

   Premises and equipment, net

14,132

13,855

13,516

13,746

14,065

   Other assets

26,938

26,680

25,801

26,688

26,464







      Total assets

$         607,686

$         608,048

$         616,632

$        608,895

$         601,961







Liabilities






   Non-interest-bearing deposits

$         111,781

$         109,785

$         107,175

$          99,973

$           99,025

   Interest-bearing deposits

407,335

411,088

416,195

417,210

414,748

       Total deposits

519,116

520,873

523,370

517,183

513,773

   Short-term borrowings and long-term debt

27,616

27,954

35,117

35,114

33,707

   Other liabilities

3,390

3,266

3,355

3,658

3,192

      Total liabilities

550,122

552,093

561,842

555,955

550,672







   Shareholders' equity

57,564

55,955

54,790

52,940

51,289







      Total liabilities and shareholders' equity

$         607,686

$         608,048

$         616,632

$        608,895

$         601,961







 

FIDELITY D & D BANCORP, INC.

Selected Financial Ratios and Other Data






Three Months Ended


Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Selected returns and financial ratios






   Diluted earnings per share

$              0.61

$               0.57

$              0.56

$               0.54

$              0.59

   Dividends per share

$              0.25

$               0.25

$              0.25

$               0.25

$              0.25

   Yield on interest-earning assets (FTE)

4.36%

4.41%

4.39%

4.39%

4.65%

   Cost of interest-bearing liabilities

0.74%

0.77%

0.84%

0.91%

1.00%

   Net interest spread

3.62%

3.64%

3.55%

3.48%

3.65%

   Net interest margin

3.79%

3.81%

3.73%

3.67%

3.85%

   Return on average assets

0.92%

0.87%

0.82%

0.78%

0.87%

   Return on average equity

9.67%

9.47%

9.23%

9.01%

10.27%

   Efficiency ratio

61.74%

64.54%

62.89%

65.35%

64.16%

   Expense ratio

1.69%

1.84%

1.74%

1.88%

1.96%








Nine Months Ended





Sep. 30, 2012

Sep. 30, 2011




   Diluted earnings per share

$              1.74

$               1.74




   Dividends per share

$              0.75

$               0.75




   Yield on interest-earning assets (FTE)

4.39%

4.87%




   Cost of interest-bearing liabilities

0.78%

1.14%




   Net interest spread

3.61%

3.73%




   Net interest margin

3.78%

3.97%




   Return on average assets

0.87%

0.87%




   Return on average equity

9.46%

10.37%




   Efficiency ratio

63.06%

65.52%




   Expense ratio

1.76%

2.10%










Other data







Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

   Book value per share

$            25.37

$             24.69

$            24.18

$             23.78

$            23.26

   Equity to assets

9.51%

9.49%

8.60%

8.84%

8.38%

   Allowance for loan losses to:






      Total loans

1.89%

1.91%

1.97%

1.97%

1.99%

      Non-accrual loans

0.65x

0.60x

0.65x

0.58x

1.00x

   Non-accrual loans to total loans

2.89%

3.16%

3.04%

3.40%

1.99%

   Non-performing assets to total assets

2.72%

3.70%

3.32%

3.58%

2.43%







SOURCE Fidelity D & D Bancorp, Inc.



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