Exhibit 99.1

FIDELITY D & D BANCORP, INC.

FOR IMMEDIATE RELEASE

 

Date: October 24, 2012

 

Contacts:

Daniel J. Santaniello	Salvatore R. DeFrancesco, Jr.
President and	Treasurer and
Chief Executive Officer	Chief Financial Officer
570-504-8035	570-504-8000

 

FIDELITY D & D BANCORP, INC.

REPORTS THIRD QUARTER 2012 FINANCIAL RESULTS

 

Dunmore, PA – 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 quarters 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 a 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 offset 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			0.65	x			0.60	x			0.65	x			0.58	x			1.00	x
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	%