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8-K - FORM 8-K - FIDELITY D & D BANCORP INCv351330_8k.htm

Exhibit 99.1

FIDELITY D & D BANCORP, INC.

FOR IMMEDIATE RELEASE

 

Date: July 31, 2013

 

Contacts:

 

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

 

FIDELITY D & D BANCORP, INC.

REPORTS SECOND QUARTER 2013 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 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%