DUNMORE, Pa., Oct. 29, 2015 (GLOBE NEWSWIRE) — Fidelity D & D Bancorp, Inc. (OTCBB:FDBC), parent company of The Fidelity Deposit and Discount Bank, announced net income for the quarter ended September 30, 2015 of $1.9 million, a $0.3 million, or 18%, increase compared to the same 2014 quarter. Earnings improvement resulted from strategic growth which expanded net interest income by 8%. The Company attributed its successful growth and net interest income improvement to its relationship management strategy with $62.6 million growth in quarterly average earning assets. This growth was funded by a $76.9 million increase in average deposit balances plus a $4.0 million average balance expansion of shareholder’s equity, partially offset by a $20.3 million reduction in the combined average borrowings and debt level, compared to the prior year third quarter. Additional operating expense was incurred primarily from an increase in both salaries and benefits, and premises and equipment costs, which was offset by more gains on loan sales and loan service charges compared to the previous year’s third quarter. The return on average assets (ROA) was 1.06% for the third quarter of 2015 and 0.98% for the same period of 2014. Earnings per share on a diluted basis were $0.79 and $0.67 for the three months ended September 30, 2015 and 2014, respectively.
“Fidelity’s strong third quarter results are reflective of the strategic focus on long term sustainable growth,” stated Daniel J. Santaniello, President and Chief Executive Officer. “Compared to a year ago, we increased loans, deposit, non-interest income, capital, and increased our dividend to our shareholders. Our balance sheet and asset quality are strong and our Fidelity Bankers remain committed to helping our clients succeed financially.”
Net income for the nine months ended September 30, 2015 was $5.3 million, an increase of $0.6 million, or 12%, compared to net income of $4.7 million for the nine months ended September 30, 2014. The year-to-date period earnings improvement occurred from producing 7% more net interest income with lower provision for loan losses and higher non-interest income. The earnings were partially offset by an increase in other expenses, primarily the long-term debt pre-payment fee and salaries and benefits. Realizing an Internal Revenue Service (IRS) audit adjustment credit for income taxes contributed towards the net income improvement compared to the prior year-to-date period. ROA was 1.00% for the nine months ended September 30, 2015 compared to 0.97% for the nine months ended September 30, 2014. Earnings per share on a diluted basis were $2.16 and $1.95 for the nine months ended September 30, 2015 and 2014, respectively.
The Company’s assets increased $52.7 million, or 8%, to total $729.2 million at September 30, 2015 from $676.5 million at December 31, 2014. The first nine months of growth in 2015 resulted primarily from adding $26.9 million in net loans and $28.9 million in securities. This earning asset growth was supported by deploying the $56.1 million deposit growth plus $2.8 million more short-term borrowings and $3.4 million increase of shareholder’s equity, after satisfying the $10.0 million payoff of long-term debt.
Net interest income was $6.0 million for the quarter ended September 30, 2015, up $0.5 million, or 8%, compared to $5.5 million for the quarter ended September 30, 2014. This resulted from larger average earning assets, albeit lower earning yield, and savings from less debt, all which was funded with deposit growth. This activity pressured net interest spread down 1 basis point coupled with the $62.6 million average earning asset growth brought net interest margin down to 3.72% for the third quarter of 2015 compared to 3.78% for the same 2014 quarter.
Net interest income increased $1.1 million, or 7%, to $17.4 million for the nine months ended September 30, 2015 from $16.3 million recorded during the same period of 2014. Net interest margin was 3.69% during the first nine months of 2015 compared to 3.79% during the first nine months of 2014, a decline of 10 basis points. This decline resulted from growth in the average earning assets base, stemming from average loan balance growth of $38.8 million and $13.4 million added to average investments. The asset growth lowered yield on interest-earning assets by 18 basis points, while the rate on interest-bearing liabilities declined by 12 basis points from the removed long-term debt.
The provision for loan losses for the third quarter ending September 30, 2015 was in line with the provision provided for the same 2014 quarter at $0.2 million. Provision for loan losses was $0.5 million for the nine months ending September 30, 2015, compared to $0.8 million for the same 2014 period. The allowance for loan losses was 1.69% of total loans at September 30, 2015, down from 1.84% at September 30, 2014 with a reduction in non-accrual loans to total loans from 0.89% at September 30, 2014 to 0.80% at September 30, 2015.
Total other income recorded for the quarters ended September 30, 2015 and 2014 was $2.0 million and $1.7 million, respectively. Increase in other income components was primarily due to the $195 thousand more total gains recognized from the sale of loans and $75 thousand more from loan service charges. These were offset by the $35 thousand loss on the disposal of equipment and $33 thousand fewer deposit service charges collected.
Total other income for the nine months ended September 30, 2015 was $5.6 million compared to $5.3 million for the nine months ended September 30, 2014. The revenue increases in the comparative period resulted primarily from $409 thousand more gains from the sale of loans, $88 thousand added fiduciary fees, $71 thousand more other revenue and $51 thousand more service charges on loans. These items were partially offset by the $275 thousand fewer gains realized from the sale on investment securities and $60 thousand lower deposit service charges collected for the nine months ended September 30, 2015 when compared to the same 2014 period.
Total other operating expenses were $5.2 million for the third quarter of 2015, $0.3 million higher compared to $4.9 million for the third quarter of 2014. The other operating expenses increase was primarily attributable to $236 thousand added salary and benefit expenses, $102 thousand higher premises and equipment expenses, $87 thousand more data processing expense, and $78 thousand more advertising and marketing when compared to the same 2014 quarter. These items were partially offset by $144 thousand less ORE expense.
Total other operating expenses increased $1.6 million to $16.1 million and $14.5 million for the nine months ending September 30, 2015 and 2014, respectively. The current period included the $570 thousand long-term debt pre-payment penalty; $568 thousand additional salary and benefit expenses; $177 thousand more professional fees; $122 thousand added advertising and marketing expenses; $121 thousand higher premises and equipment expenses; $100 thousand more data processing costs and $76 thousand mortgage loan reacquisition costs when compared to the same 2014 period. These items were partially offset by $86 thousand less ORE costs and $33 thousand fewer collection expenses.
During the second quarter of 2015, the Company concluded an audit by the IRS whereas an audit adjustment resulted in recording a $438 thousand credit for income taxes. This credit coupled with a lower effective tax rate for the third quarter of 2015 due to additional expenses reducing the level of pre-tax income, reduced the provision for income taxes by $427 thousand for the nine months ended September 30, 2015 when compared to the nine months ended September 30, 2014.
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:
- 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;
- 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;
- impacts of the new capital and liquidity requirements of the Basel III standards and other regulatory pronouncements, regulations and rules;
- governmental monetary and fiscal policies, as well as legislative and regulatory changes;
- effects of short- and long-term federal budget and tax negotiations and their effect on economic and business conditions;
- the effect of changes in accounting policies and practices, as may be adopted by banking 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;
- the interruption or breach in security of our information systems resulting in failures or disruptions in customer account management, general ledger processing and loan or deposit updates;
- 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;
- volatility in the securities markets;
- acts of war or terrorism; and
- disruption of credit and equity markets;
- 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: | September 30, 2015 | December 31, 2014 | ||||||
| Assets | ||||||||
| Total cash and cash equivalents | $ | 25,690 | $ | 25,851 | ||||
| Investment securities | 126,782 | 97,896 | ||||||
| Federal Home Loan Bank Stock | 1,085 | 1,306 | ||||||
| Loans and leases | 543,497 | 516,661 | ||||||
| Allowance for loan losses | (9,149 | ) | (9,173 | ) | ||||
| Premises and equipment, net | 16,875 | 14,846 | ||||||
| Life insurance cash surrender value | 10,995 | 10,741 | ||||||
| Other assets | 13,433 | 18,357 | ||||||
| Total assets | $ | 729,208 | $ | 676,485 | ||||
| Liabilities | ||||||||
| Non-interest-bearing deposits | $ | 150,714 | $ | 129,370 | ||||
| Interest-bearing deposits | 492,289 | 457,574 | ||||||
| Total deposits | 643,003 | 586,944 | ||||||
| Short-term borrowings | 6,743 | 3,969 | ||||||
| Long-term debt | – | 10,000 | ||||||
| Other liabilities | 3,829 | 3,353 | ||||||
| Total liabilities | 653,575 | 604,266 | ||||||
| Shareholders’ equity | 75,633 | 72,219 | ||||||
| Total liabilities and shareholders’ equity | $ | 729,208 | $ | 676,485 | ||||
| Average Year-To-Date Balances: | September 30, 2015 | December 31, 2014 | ||||||
| Assets | ||||||||
| Total cash and cash equivalents | $ | 23,810 | $ | 22,857 | ||||
| Investment securities | 120,878 | 109,166 | ||||||
| Loans and leases, net | 520,323 | 486,552 | ||||||
| Premises and equipment, net | 15,654 | 14,271 | ||||||
| Other assets | 27,232 | 28,013 | ||||||
| Total assets | $ | 707,897 | $ | 660,859 | ||||
| Liabilities | ||||||||
| Non-interest-bearing deposits | $ | 137,442 | $ | 131,691 | ||||
| Interest-bearing deposits | 469,947 | 425,517 | ||||||
| Total deposits | 607,389 | 557,208 | ||||||
| Short-term borrowings and long-term debt | 22,542 | 29,949 | ||||||
| Other liabilities | 4,151 | 4,075 | ||||||
| Total liabilities | 634,082 | 591,232 | ||||||
| Shareholders’ equity | 73,815 | 69,627 | ||||||
| Total liabilities and shareholders’ equity | $ | 707,897 | $ | 660,859 | ||||
| FIDELITY D & D BANCORP, INC. | ||||||||||||||||||||
| Unaudited Condensed Consolidated Statements of Income | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |||||||||||||||||
| Interest income | ||||||||||||||||||||
| Loans and leases | $ | 5,934 | $ | 5,656 | $ | 17,385 | $ | 16,588 | ||||||||||||
| Securities and other | 678 | 639 | 1,969 | 1,854 | ||||||||||||||||
| Total interest income | 6,612 | 6,295 | 19,354 | 18,442 | ||||||||||||||||
| Interest expense | ||||||||||||||||||||
| Deposits | 574 | 507 | 1,639 | 1,495 | ||||||||||||||||
| Borrowings and debt | 6 | 223 | 285 | 663 | ||||||||||||||||
| Total interest expense | 580 | 730 | 1,924 | 2,158 | ||||||||||||||||
| Net interest income | 6,032 | 5,565 | 17,430 | 16,284 | ||||||||||||||||
| Provision for loan losses | (200 | ) | (210 | ) | (500 | ) | (810 | ) | ||||||||||||
| Other income | 2,023 | 1,748 | 5,606 | 5,307 | ||||||||||||||||
| Other expenses | (5,239 | ) | (4,910 | ) | (16,070 | ) | (14,456 | ) | ||||||||||||
| Provision for income taxes | (687 | ) | (562 | ) | (1,184 | ) | (1,611 | ) | ||||||||||||
| Net income | $ | 1,929 | $ | 1,631 | $ | 5,282 | $ | 4,714 | ||||||||||||
| Three Months Ended | ||||||||||||||||||||
| Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | ||||||||||||||||
| Interest income | ||||||||||||||||||||
| Loans and leases | $ | 5,934 | $ | 5,813 | $ | 5,638 | $ | 5,749 | $ | 5,656 | ||||||||||
| Securities and other | 678 | 625 | 666 | 653 | 639 | |||||||||||||||
| Total interest income | 6,612 | 6,438 | 6,304 | 6,402 | 6,295 | |||||||||||||||
| Interest expense | ||||||||||||||||||||
| Deposits | 574 | 508 | 557 | 541 | 507 | |||||||||||||||
| Borrowings and debt | 6 | 139 | 140 | 218 | 223 | |||||||||||||||
| Total interest expense | 580 | 647 | 697 | 759 | 730 | |||||||||||||||
| Net interest income | 6,032 | 5,791 | 5,607 | 5,643 | 5,565 | |||||||||||||||
| Provision for loan losses | (200 | ) | (150 | ) | (150 | ) | (250 | ) | (210 | ) | ||||||||||
| Other income | 2,023 | 1,833 | 1,750 | 2,047 | 1,748 | |||||||||||||||
| Other expenses | (5,239 | ) | (5,744 | ) | (5,087 | ) | (5,247 | ) | (4,910 | ) | ||||||||||
| Provision for income taxes | (687 | ) | 50 | (547 | ) | (555 | ) | (562 | ) | |||||||||||
| Net income | $ | 1,929 | $ | 1,780 | $ | 1,573 | $ | 1,638 | $ | 1,631 | ||||||||||
| FIDELITY D & D BANCORP, INC. | ||||||||||||||||||||
| Unaudited Condensed Consolidated Balance Sheets | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| At Period End: | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | |||||||||||||||
| Assets | ||||||||||||||||||||
| Total cash and cash equivalents | $ | 25,690 | $ | 21,737 | $ | 18,983 | $ | 25,851 | $ | 19,685 | ||||||||||
| Investment securities | 126,782 | 121,812 | 126,481 | 97,896 | 114,425 | |||||||||||||||
| Federal Home Loan Bank Stock | 1,085 | 1,988 | 1,291 | 1,306 | 2,282 | |||||||||||||||
| Loans and leases | 543,497 | 540,787 | 520,855 | 516,661 | 503,453 | |||||||||||||||
| Allowance for loan losses | (9,149 | ) | (9,259 | ) | (9,208 | ) | (9,173 | ) | (9,277 | ) | ||||||||||
| Premises and equipment, net | 16,875 | 17,034 | 14,931 | 14,846 | 14,590 | |||||||||||||||
| Life insurance cash surrender value | 10,995 | 10,909 | 10,825 | 10,741 | 10,654 | |||||||||||||||
| Other assets | 13,433 | 13,547 | 18,349 | 18,357 | 18,073 | |||||||||||||||
| Total assets | $ | 729,208 | $ | 718,555 | $ | 702,507 | $ | 676,485 | $ | 673,885 | ||||||||||
| Liabilities | ||||||||||||||||||||
| Non-interest-bearing deposits | $ | 150,714 | $ | 137,682 | $ | 133,846 | $ | 129,370 | $ | 134,943 | ||||||||||
| Interest-bearing deposits | 492,289 | 469,204 | 467,896 | 457,574 | 436,925 | |||||||||||||||
| Total deposits | 643,003 | 606,886 | 601,742 | 586,944 | 571,868 | |||||||||||||||
| Short-term borrowings | 6,743 | 34,263 | 13,773 | 3,969 | 11,225 | |||||||||||||||
| Long-term debt | – | – | 10,000 | 10,000 | 16,000 | |||||||||||||||
| Other liabilities | 3,829 | 3,707 | 3,470 | 3,353 | 3,734 | |||||||||||||||
| Total liabilities | 653,575 | 644,856 | 628,985 | 604,266 | 602,827 | |||||||||||||||
| Shareholders’ equity | 75,633 | 73,699 | 73,522 | 72,219 | 71,058 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 729,208 | $ | 718,555 | $ | 702,507 | $ | 676,485 | $ | 673,885 | ||||||||||
| Average Quarterly Balances: | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | |||||||||||||||
| Assets | ||||||||||||||||||||
| Total cash and cash equivalents | $ | 20,486 | $ | 12,947 | $ | 38,192 | $ | 31,377 | $ | 15,766 | ||||||||||
| Investment securities | 126,238 | 126,625 | 109,588 | 115,934 | 111,335 | |||||||||||||||
| Loans and leases, net | 532,646 | 520,857 | 507,185 | 500,985 | 490,712 | |||||||||||||||
| Premises and equipment, net | 17,009 | 15,002 | 14,929 | 14,540 | 14,432 | |||||||||||||||
| Other assets | 24,769 | 28,110 | 28,861 | 29,142 | 28,142 | |||||||||||||||
| Total assets | $ | 721,148 | $ | 703,541 | $ | 698,755 | $ | 691,978 | $ | 660,387 | ||||||||||
| Liabilities | ||||||||||||||||||||
| Non-interest-bearing deposits | $ | 143,794 | $ | 136,079 | $ | 132,327 | $ | 138,644 | $ | 131,201 | ||||||||||
| Interest-bearing deposits | 488,608 | 457,111 | 463,849 | 451,632 | 424,256 | |||||||||||||||
| Total deposits | 632,402 | 593,190 | 596,176 | 590,276 | 555,457 | |||||||||||||||
| Short-term borrowings and long-term debt | 9,820 | 32,187 | 25,794 | 25,391 | 30,071 | |||||||||||||||
| Other liabilities | 4,327 | 4,310 | 3,811 | 4,467 | 4,285 | |||||||||||||||
| Total liabilities | 646,549 | 629,687 | 625,781 | 620,134 | 589,813 | |||||||||||||||
| Shareholders’ equity | 74,599 | 73,854 | 72,974 | 71,844 | 70,574 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 721,148 | $ | 703,541 | $ | 698,755 | $ | 691,978 | $ | 660,387 | ||||||||||
| FIDELITY D & D BANCORP, INC. | ||||||||||||||||||||
| Selected Financial Ratios and Other Data | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | ||||||||||||||||
| Selected returns and financial ratios | ||||||||||||||||||||
| Basic earnings per share | $ | 0.79 | $ | 0.73 | $ | 0.65 | $ | 0.67 | $ | 0.68 | ||||||||||
| Diluted earnings per share | $ | 0.79 | $ | 0.73 | $ | 0.64 | $ | 0.67 | $ | 0.67 | ||||||||||
| Dividends per share | $ | 0.27 | $ | 0.27 | $ | 0.25 | $ | 0.35 | $ | 0.25 | ||||||||||
| Yield on interest-earning assets (FTE) | 4.06 | % | 4.12 | % | 4.08 | % | 4.12 | % | 4.25 | % | ||||||||||
| Cost of interest-bearing liabilities | 0.46 | % | 0.53 | % | 0.58 | % | 0.63 | % | 0.64 | % | ||||||||||
| Net interest spread | 3.60 | % | 3.59 | % | 3.50 | % | 3.49 | % | 3.61 | % | ||||||||||
| Net interest margin | 3.72 | % | 3.72 | % | 3.64 | % | 3.65 | % | 3.78 | % | ||||||||||
| Return on average assets | 1.06 | % | 1.01 | % | 0.91 | % | 0.94 | % | 0.98 | % | ||||||||||
| Return on average equity | 10.26 | % | 9.67 | % | 8.74 | % | 9.04 | % | 9.17 | % | ||||||||||
| Efficiency ratio | 63.98 | % | 65.84 | % | 66.86 | % | 62.48 | % | 64.92 | % | ||||||||||
| Expense ratio | 1.77 | % | 1.92 | % | 1.93 | % | 1.74 | % | 1.90 | % | ||||||||||
| Nine Months Ended | ||||||||||||||||||||
| Sep. 30, 2015 | Sep. 30, 2014 | |||||||||||||||||||
| Basic earnings per share | $ | 2.17 | $ | 1.96 | ||||||||||||||||
| Diluted earnings per share | $ | 2.16 | $ | 1.95 | ||||||||||||||||
| Dividends per share | $ | 0.79 | $ | 0.75 | ||||||||||||||||
| Yield on interest-earning assets (FTE) | 4.08 | % | 4.26 | % | ||||||||||||||||
| Cost of interest-bearing liabilities | 0.52 | % | 0.64 | % | ||||||||||||||||
| Net interest spread | 3.56 | % | 3.62 | % | ||||||||||||||||
| Net interest margin | 3.69 | % | 3.79 | % | ||||||||||||||||
| Return on average assets | 1.00 | % | 0.97 | % | ||||||||||||||||
| Return on average equity | 9.57 | % | 9.15 | % | ||||||||||||||||
| Efficiency ratio | 65.51 | % | 65.71 | % | ||||||||||||||||
| Expense ratio | 1.90 | % | 1.94 | % | ||||||||||||||||
| Other financial data | Three Months Ended | |||||||||||||||||||
| Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | ||||||||||||||||
| Book value per share | $ | 31.00 | $ | 30.21 | $ | 30.13 | $ | 29.75 | $ | 29.37 | ||||||||||
| Equity to assets | 10.37 | % | 10.26 | % | 10.47 | % | 10.68 | % | 10.54 | % | ||||||||||
| Allowance for loan losses to: | ||||||||||||||||||||
| Total loans | 1.69 | % | 1.71 | % | 1.77 | % | 1.78 | % | 1.84 | % | ||||||||||
| Non-accrual loans | 2.09x | 2.18x | 2.41x | 2.18x | 2.07x | |||||||||||||||
| Non-accrual loans to total loans | 0.80 | % | 0.79 | % | 0.73 | % | 0.82 | % | 0.89 | % | ||||||||||
| Non-performing assets to total assets | 1.11 | % | 1.13 | % | 1.15 | % | 1.18 | % | 1.09 | % | ||||||||||
CONTACT: Contacts: Daniel J. Santaniello President and Chief Executive Officer 570-504-8035 Salvatore R. DeFrancesco, Jr. Treasurer and Chief Financial Officer 570-504-8000