Attached files
| file | filename |
|---|---|
| 8-K - 8-K - FIDELITY D & D BANCORP INC | fdbc-20160203x8k.htm |
Exhibit 99.1
FIDELITY D & D BANCORP, INC.
FOR IMMEDIATE RELEASE
Date: February 3, 2016
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 IMPROVED 2015 FINANCIAL RESULTS
Dunmore, PA – Fidelity D & D Bancorp, Inc. (OTC Bulletin Board: FDBC), parent company of The Fidelity Deposit and Discount Bank, announces net income for the year ended December 31, 2015 of $7.1 million, or $2.90 diluted earnings per share, a 12% increase compared to net income for the year ended December 31, 2014 of $6.4 million, or $2.62 diluted earnings per share. The increase resulted primarily from improving revenue by $1.6 million, or 7%, more net interest income earned plus the $0.2 million more other income. Earnings improvement resulted from strategic growth attributed to a relationship management strategy producing $52.1 million growth in annual average earning assets. This growth was funded by a $57.0 million increase in average deposit balances plus a $4.8 million average balance increase of shareholder’s equity, partially offset by a $10.1 million reduction in the combined average borrowings and debt level, compared to the prior year. This revenue supported the $1.3 million upturn within other expenses from increases in salaries and benefits, marketing, and professional services. Furthermore, the Company incurred a $0.6 million pre-payment penalty expense, $0.4 million after tax, on a $10 million early pay-off of long-term debt in June 2015. Also during the 2015 second quarter, an IRS audit concluded with a tax loss adjustment that resulted in a $0.4 million credit to income taxes. The return on average assets (ROA) was 1.00% for 2015 and 0.96% for the 2014 year. Return on average equity (ROE) was 9.55% for 2015 and 9.12% for the 2014 year.
“Fidelity Bank’s 2015 and fourth quarter results demonstrated quality and consistent results as we continued to build upon our strategic priority of relationship management,” stated Daniel J. Santaniello, President and Chief Executive Officer. “In 2015, loans, deposits, non-interest income and capital show strong growth. For the second consecutive year, we returned more capital to our shareholders than the prior year. I am proud of the strong commitment of the Fidelity Bankers focus on helping our customers achieve financial success.”
Net income for the quarter ended December 31, 2015 was $1.8 million, up 11% compared to $1.6 million for the same quarter of 2014. The diluted earnings per share for the quarter were $0.74 compared to $0.67 for the same prior year period. Net interest income improved $0.4 million and provision for loan losses was higher by $0.3 million, with $0.1 million and $0.3 million reductions in other income and expenses, respectively, during the fourth quarter of 2015 over the same 2014 period. The ROA and ROE were 0.99% and 9.48%, respectively, for the fourth quarter of 2015 and 0.94% and 9.04%, respectively, for the same period of 2014.
The Company’s total assets increased 8% to $729.4 million at December 31, 2015, growth of $52.9 million from $676.5 million at December 31, 2014. Asset growth occurred from the $41.0 million, or 8%, increase in loans and $27.3 million in additional investment securities, partially offset by the $13.6 million reduction in cash balances. Total deposits grew $33.7 million, or 6%, while short-term borrowings increased $24.2 million, long-term debt reduced $10.0 million and shareholders’ equity grew $4.1 million, or 6%. The Bank’s regulatory capital ratios for the period ending December 31, 2015 were Total Risk Based Capital Ratio of 14.9%, Tier I Capital Ratio of 13.6% and Leverage Ratio of 10.1%.
Net interest income was $23.5 million for the year ended December 31, 2015, a 7% increase, or $1.6 million above the $21.9 million earned in 2014. This was achieved from earning asset growth, which occurred throughout the loan portfolio and was funded by active strategic growth in core deposits, plus efforts to mitigate margin pressure while operating within volatile economic conditions with uncertainties, and interest rates remaining at very low levels. As a result, net interest margin was 3.69% for 2015, or 6 basis points lower, from 3.75% for 2014, primarily from generating lower yields on the $52.1 million larger average interest-earning asset base in 2015.
Net interest income was $6.0 million for the quarter ended December 31, 2015, $0.4 million, or 7%, higher compared to the $5.6 million recorded during the same quarter of 2014. More interest income earned on the added interest-bearing assets along with less interest expense from debt contributed to the overall increase. As a result, net interest margin improved 4 basis points to 3.69% for the fourth quarter 2015, compared to 3.65% for same 2014 period.
The provision for loan losses was $1.1 million for both the 2015 and 2014 years. Efforts were taken to improve asset quality by addressing the migration of commercial credits to non-performing status, including further reduction of non-accrual loans throughout the year. These results were negated by a preemptive move of a single large commercial real estate loan to nonaccrual status at year-end, which necessitated maintaining the provision for loan losses year-over-year.
The provision for loan losses was $0.6 million for the fourth quarter of 2015 compared to the $0.3 million required for the fourth quarter of 2014. The allowance for loan losses during the fourth quarter of 2015 required a higher level of provision for loan losses. The fourth quarter provision for loan losses resulted primarily from a commercial real estate loan preemptive move to nonaccrual status at year-end, when compared to the fourth quarter of 2014.
Despite the successful loan workout efforts, the ratio of non-performing assets to total assets at December 31, 2015 was 1.76%, an increase from 1.18% at December 31, 2014, from the commercial real estate loan move into nonaccrual loans at year-end. Consequently, the ratio of non-accrual loans to total loans at December 31, 2015 almost doubled to 1.61%. However, net charge-offs were $0.7 million in 2015 compared to $0.8 million in 2014. The allowance for loan losses was 1.71% of total loans at December 31, 2015 down from 1.78% at December 31, 2014.
Total other income was $7.5 million for the 2015 year, up compared to $7.4 million for the year ended December 31, 2014. The increase resulted primarily from recognizing $0.5 million additional gains on sold loans, growth of $0.1 million more interchange transaction fees, $65 thousand from higher trust activities, and $46 thousand of more net servicing fees negated the $0.5 million less in gains on fewer investment securities sold and $0.1 million decrease in deposit service charges.
Total other income recorded for the quarter ended December 31, 2015 was $1.9 million compared with $2.0 million for the same quarter in 2014. The decrease resulted primarily from fewer gains on sold investment securities in the 2015 fourth quarter.
Total other operating expenses increased by $1.3 million, or 7%, to $21.0 million for the year ending December 31, 2015, compared to $19.7 million for the 2014 year. The increase was due to higher salaries and benefits of $0.6 million, increased advertising and marketing of $0.2 million, $0.3 million in additional professional services, $0.2 million more data processing expense and an additional $0.1 million in pre-payment fees on long-term debt. These items were offset by a reduction of $0.2 million in other real estate owned and collection expenses.
Total other operating expenses decreased $0.3 million, or 6%, to $4.9 million from $5.2 million for the quarters ending December 31, 2015 and 2014, respectively. Most of the decrease is due to the $0.5 million prepayment fee recognized during the fourth quarter of 2014. This offset increases of $90 thousand in professional fees and $81 thousand in data processing expenses.
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 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:
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· |
the effects of economic conditions on current customers, specifically the effect of the economy on loan customers’ ability to repay loans; |
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· |
the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; |
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· |
the impact of new or changes in existing laws and regulations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the regulations promulgated there under; |
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· |
impacts of the new capital and liquidity requirements of the Basel III standards and other regulatory pronouncements, regulations and rules; |
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· |
governmental monetary and fiscal policies, as well as legislative and regulatory changes; |
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· |
effects of short- and long-term federal budget and tax negotiations and their effect on economic and business conditions; |
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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; |
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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; |
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· |
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; |
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· |
technological changes; |
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· |
the interruption or breach in security of our information systems and other technological risks and attacks resulting in failures or disruptions in customer account management, general ledger processing and loan or deposit updates and potential impacts resulting therefrom including additional costs, reputational damage, regulatory penalties, and financial losses; |
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· |
acquisitions and integration of acquired businesses; |
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· |
the failure of assumptions underlying the establishment of reserves for loan losses and estimations of values of collateral and various financial assets and liabilities; |
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· |
volatilities in the securities markets; |
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· |
acts of war or terrorism; |
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· |
disruption of credit and equity markets; and |
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· |
the risk that our analyses of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful. |
The Company cautions readers not to place undue reliance on forward-looking statements, which reflect analyses only as of the date of this release. The Company has no obligation to update any forward-looking statements to reflect events or circumstances after the date of this release.
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: |
December 31, 2015 |
December 31, 2014 |
||
|
Assets |
||||
|
Total cash and cash equivalents |
$ |
12,277 |
$ |
25,851 |
|
Investment securities |
125,232 | 97,896 | ||
|
Federal Home Loan Bank Stock |
2,120 | 1,306 | ||
|
Loans and leases |
557,630 | 516,661 | ||
|
Allowance for loan losses |
(9,527) | (9,173) | ||
|
Premises and equipment, net |
16,723 | 14,846 | ||
|
Life insurance cash surrender value |
11,082 | 10,741 | ||
|
Other assets |
13,821 | 18,357 | ||
|
Total assets |
$ |
729,358 |
$ |
676,485 |
|
Liabilities |
||||
|
Non-interest-bearing deposits |
$ |
142,774 |
$ |
129,370 |
|
Interest-bearing deposits |
477,901 | 457,574 | ||
|
Total deposits |
620,675 | 586,944 | ||
|
Short-term borrowings |
28,204 | 3,969 | ||
|
Long-term debt |
- |
10,000 | ||
|
Other liabilities |
4,128 | 3,353 | ||
|
Total liabilities |
653,007 | 604,266 | ||
|
Shareholders' equity |
76,351 | 72,219 | ||
|
Total liabilities and shareholders' equity |
$ |
729,358 |
$ |
676,485 |
|
Average Year-To-Date Balances: |
December 31, 2015 |
December 31, 2014 |
||
|
Assets |
||||
|
Total cash and cash equivalents |
$ |
22,248 |
$ |
22,857 |
|
Investment securities |
122,549 | 109,166 | ||
|
Loans and leases, net |
525,571 | 486,552 | ||
|
Premises and equipment, net |
15,954 | 14,271 | ||
|
Other assets |
26,520 | 28,013 | ||
|
Total assets |
$ |
712,842 |
$ |
660,859 |
|
Liabilities |
||||
|
Non-interest-bearing deposits |
$ |
138,389 |
$ |
131,691 |
|
Interest-bearing deposits |
475,853 | 425,517 | ||
|
Total deposits |
614,242 | 557,208 | ||
|
Short-term borrowings and long-term debt |
19,886 | 29,949 | ||
|
Other liabilities |
4,306 | 4,075 | ||
|
Total liabilities |
638,434 | 591,232 | ||
|
Shareholders' equity |
74,408 | 69,627 | ||
|
Total liabilities and shareholders' equity |
$ |
712,842 |
$ |
660,859 |
FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Statements of Income
(dollars in thousands)
|
Three Months Ended |
Twelve Months Ended |
|||||||||
|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|||||||
|
Interest income |
||||||||||
|
Loans and leases |
$ |
5,979 |
$ |
5,749 |
$ |
23,364 |
$ |
22,337 | ||
|
Securities and other |
681 | 653 | 2,650 | 2,507 | ||||||
|
Total interest income |
6,660 | 6,402 | 26,014 | 24,844 | ||||||
|
Interest expense |
||||||||||
|
Deposits |
597 | 541 | 2,236 | 2,036 | ||||||
|
Borrowings and debt |
8 | 218 | 293 | 881 | ||||||
|
Total interest expense |
605 | 759 | 2,529 | 2,917 | ||||||
|
Net interest income |
6,055 | 5,643 | 23,485 | 21,927 | ||||||
|
Provision for loan losses |
(575) | (250) | (1,075) | (1,060) | ||||||
|
Other income |
1,927 | 2,047 | 7,533 | 7,354 | ||||||
|
Other expenses |
(4,952) | (5,247) | (21,022) | (19,703) | ||||||
|
Provision for income taxes |
(634) | (555) | (1,818) | (2,166) | ||||||
|
Net income |
$ |
1,821 |
$ |
1,638 |
$ |
7,103 |
$ |
6,352 | ||
|
Three Months Ended |
||||||||||
|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
||||||
|
Interest income |
||||||||||
|
Loans and leases |
$ |
5,979 |
$ |
5,934 |
$ |
5,813 |
$ |
5,638 |
$ |
5,749 |
|
Securities and other |
681 | 678 | 625 | 666 | 653 | |||||
|
Total interest income |
6,660 | 6,612 | 6,438 | 6,304 | 6,402 | |||||
|
Interest expense |
||||||||||
|
Deposits |
597 | 574 | 508 | 557 | 541 | |||||
|
Borrowings and debt |
8 | 6 | 139 | 140 | 218 | |||||
|
Total interest expense |
605 | 580 | 647 | 697 | 759 | |||||
|
Net interest income |
6,055 | 6,032 | 5,791 | 5,607 | 5,643 | |||||
|
Provision for loan losses |
(575) | (200) | (150) | (150) | (250) | |||||
|
Other income |
1,927 | 2,023 | 1,833 | 1,750 | 2,047 | |||||
|
Other expenses |
(4,952) | (5,239) | (5,744) | (5,087) | (5,247) | |||||
|
Provision for income taxes |
(634) | (687) | 50 | (547) | (555) | |||||
|
Net income |
$ |
1,821 |
$ |
1,929 |
$ |
1,780 |
$ |
1,573 |
$ |
1,638 |
FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Balance Sheets
(dollars in thousands)
|
At Period End: |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
|||||
|
Assets |
||||||||||
|
Total cash and cash equivalents |
$ |
12,277 |
$ |
25,690 |
$ |
21,737 |
$ |
18,983 |
$ |
25,851 |
|
Investment securities |
125,232 | 126,782 | 121,812 | 126,481 | 97,896 | |||||
|
Federal Home Loan Bank Stock |
2,120 | 1,085 | 1,988 | 1,291 | 1,306 | |||||
|
Loans and leases |
557,630 | 543,497 | 540,787 | 520,855 | 516,661 | |||||
|
Allowance for loan losses |
(9,527) | (9,149) | (9,259) | (9,208) | (9,173) | |||||
|
Premises and equipment, net |
16,723 | 16,875 | 17,034 | 14,931 | 14,846 | |||||
|
Life insurance cash surrender value |
11,082 | 10,995 | 10,909 | 10,825 | 10,741 | |||||
|
Other assets |
13,821 | 13,433 | 13,547 | 18,349 | 18,357 | |||||
|
Total assets |
$ |
729,358 |
$ |
729,208 |
$ |
718,555 |
$ |
702,507 |
$ |
676,485 |
|
Liabilities |
||||||||||
|
Non-interest-bearing deposits |
$ |
142,774 |
$ |
150,714 |
$ |
137,682 |
$ |
133,846 |
$ |
129,370 |
|
Interest-bearing deposits |
477,901 | 492,289 | 469,204 | 467,896 | 457,574 | |||||
|
Total deposits |
620,675 | 643,003 | 606,886 | 601,742 | 586,944 | |||||
|
Short-term borrowings |
28,204 | 6,743 | 34,263 | 13,773 | 3,969 | |||||
|
Long-term debt |
- |
- |
- |
10,000 | 10,000 | |||||
|
Other liabilities |
4,128 | 3,829 | 3,707 | 3,470 | 3,353 | |||||
|
Total liabilities |
653,007 | 653,575 | 644,856 | 628,985 | 604,266 | |||||
|
Shareholders' equity |
76,351 | 75,633 | 73,699 | 73,522 | 72,219 | |||||
|
Total liabilities and shareholders' equity |
$ |
729,358 |
$ |
729,208 |
$ |
718,555 |
$ |
702,507 |
$ |
676,485 |
|
Average Quarterly Balances: |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
|||||
|
Assets |
||||||||||
|
Total cash and cash equivalents |
$ |
17,612 |
$ |
20,486 |
$ |
12,947 |
$ |
38,192 |
$ |
31,377 |
|
Investment securities |
127,509 | 126,238 | 126,625 | 109,588 | 115,934 | |||||
|
Loans and leases, net |
541,144 | 532,646 | 520,857 | 507,185 | 500,985 | |||||
|
Premises and equipment, net |
16,843 | 17,009 | 15,002 | 14,929 | 14,540 | |||||
|
Other assets |
24,409 | 24,769 | 28,110 | 28,861 | 29,142 | |||||
|
Total assets |
$ |
727,517 |
$ |
721,148 |
$ |
703,541 |
$ |
698,755 |
$ |
691,978 |
|
Liabilities |
||||||||||
|
Non-interest-bearing deposits |
$ |
141,198 |
$ |
143,794 |
$ |
136,079 |
$ |
132,327 |
$ |
138,644 |
|
Interest-bearing deposits |
493,383 | 488,608 | 457,111 | 463,849 | 451,632 | |||||
|
Total deposits |
634,581 | 632,402 | 593,190 | 596,176 | 590,276 | |||||
|
Short-term borrowings and long-term debt |
12,003 | 9,820 | 32,187 | 25,794 | 25,391 | |||||
|
Other liabilities |
4,766 | 4,327 | 4,310 | 3,811 | 4,467 | |||||
|
Total liabilities |
651,350 | 646,549 | 629,687 | 625,781 | 620,134 | |||||
|
Shareholders' equity |
76,167 | 74,599 | 73,854 | 72,974 | 71,844 | |||||
|
Total liabilities and shareholders' equity |
$ |
727,517 |
$ |
721,148 |
$ |
703,541 |
$ |
698,755 |
$ |
691,978 |
FIDELITY D & D BANCORP, INC.
Selected Financial Ratios and Other Data
|
Three Months Ended |
||||||||||
|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
||||||
|
Selected returns and financial ratios |
||||||||||
|
Basic earnings per share |
$ |
0.74 |
$ |
0.79 |
$ |
0.73 |
$ |
0.65 |
$ |
0.67 |
|
Diluted earnings per share |
$ |
0.74 |
$ |
0.79 |
$ |
0.73 |
$ |
0.64 |
$ |
0.67 |
|
Dividends per share |
$ |
0.37 |
$ |
0.27 |
$ |
0.27 |
$ |
0.25 |
$ |
0.35 |
|
Yield on interest-earning assets (FTE) |
4.05% | 4.06% | 4.12% | 4.08% | 4.12% | |||||
|
Cost of interest-bearing liabilities |
0.48% | 0.46% | 0.53% | 0.58% | 0.63% | |||||
|
Net interest spread |
3.57% | 3.60% | 3.59% | 3.50% | 3.49% | |||||
|
Net interest margin |
3.69% | 3.72% | 3.72% | 3.64% | 3.65% | |||||
|
Return on average assets |
0.99% | 1.06% | 1.01% | 0.91% | 0.94% | |||||
|
Return on average equity |
9.48% | 10.26% | 9.67% | 8.74% | 9.04% | |||||
|
Efficiency ratio |
61.15% | 63.98% | 65.84% | 66.86% | 62.48% | |||||
|
Expense ratio |
1.68% | 1.77% | 1.92% | 1.93% | 1.74% | |||||
|
Twelve Months Ended |
||||||||||
|
Dec. 31, 2015 |
Dec. 31, 2014 |
|||||||||
|
Basic earnings per share |
$ |
2.91 |
$ |
2.63 | ||||||
|
Diluted earnings per share |
$ |
2.90 |
$ |
2.62 | ||||||
|
Dividends per share |
$ |
1.16 |
$ |
1.10 | ||||||
|
Yield on interest-earning assets (FTE) |
4.07% | 4.23% | ||||||||
|
Cost of interest-bearing liabilities |
0.51% | 0.64% | ||||||||
|
Net interest spread |
3.56% | 3.59% | ||||||||
|
Net interest margin |
3.69% | 3.75% | ||||||||
|
Return on average assets |
1.00% | 0.96% | ||||||||
|
Return on average equity |
9.55% | 9.12% | ||||||||
|
Efficiency ratio |
64.40% | 64.88% | ||||||||
|
Expense ratio |
1.86% | 1.89% | ||||||||
|
Other financial data |
Three Months Ended |
|||||||||
|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
||||||
|
Book value per share |
$ |
31.25 |
$ |
31.00 |
$ |
30.21 |
$ |
30.13 |
$ |
29.75 |
|
Equity to assets |
10.47% | 10.37% | 10.26% | 10.47% | 10.68% | |||||
|
Allowance for loan losses to: |
||||||||||
|
Total loans |
1.71% | 1.69% | 1.71% | 1.77% | 1.78% | |||||
|
Non-accrual loans |
1.06x |
2.09x |
2.18x |
2.41x |
2.18x |
|||||
|
Non-accrual loans to total loans |
1.61% | 0.80% | 0.79% | 0.73% | 0.82% | |||||
|
Non-performing assets to total assets |
1.76% | 1.11% | 1.13% | 1.15% | 1.18% | |||||