Fidelity D & D Bancorp, Inc. 2012 Financial Results
DUNMORE, Pa., Jan. 30, 2013 /PRNewswire/ -- Fidelity D & D
Bancorp, Inc. (OTC Bulletin Board: FDBC), parent company of The
Fidelity Deposit and Discount Bank, announced a 5% net income
increase for the year ended December 31,
2012, with net income of $5.3
million, or $2.32 per share,
compared to net income for the year ended December 31, 2011 of $5.0
million, or $2.28 per
share. This was accomplished through generating revenue that
in total increased $1.5 million, or
6%, in 2012 over to the 2011 year. The net interest income
decline was moderated, given the 2012 interest rate environment, to
$202 thousand, or less than a 1%
change. Asset quality was addressed with resolutions occurring but
at a cost of $850 thousand in
additional provisions for loan losses with an additional
$63 thousand incurred in other real
estate expenses. Other income was propelled by $966 thousand more in gains from loan sales and
$265 thousand gains on securities,
partially offset by $139 thousand of
additional foreclosed asset losses. Improvements were made
during 2012, where loan service charges, trust revenue, and
interchange fees increased $302,
$192 and $118
thousand, respectively. In addition, other operating
expense was elevated by a $236
thousand long-term debt pre-payment fee. Excluding
this fee and the other real estate costs, operating expenses
remained mostly flat during 2012 compared to the 2011 year.
"We are very pleased with this year's financial result, which
reflects growth in a number of key areas," stated Daniel J. Santaniello, President and Chief
Executive Officer. "Our strategic focus on offering a
differentiated approach to customer service, along with our
committed employees has enabled us to increase customers, loans and
low cost deposits within our marketplace. This focus produced
revenue growth and an increase in capital that positions us well
for continued growth."
Net income for the quarter ended December
31, 2012 was $1.3 million
compared to $1.2 million for the same
quarter of 2011. The earnings per share for the quarter were
$0.58 compared to $0.54 for the same prior year period. Net
interest income for the 2012 fourth quarter improved $161 thousand over the same 2011 period primarily
from reduced interest expense and higher non-interest checking
balances plus the contribution from growth in the loan
portfolio. The interchange fee, loan servicing and mortgage
banking initiatives engaged during the past year improved the
current quarter's other income $167
thousand and impairment losses on securities declined
$165 thousand. These
improvements were partially offset by the $103 thousand, or 2%, increase in operating
expenses, primarily in salary and benefits, compared to the 2011
fourth quarter.
The Company's assets totaled $601.9
million at December 31, 2012,
down from $606.7 million at
December 31, 2011. Asset growth
was muted from utilizing available cash to fund loan growth and pay
down other liabilities and long-term debt. Shareholders'
equity grew $5.7 million, or
11%. The Bank's regulatory capital ratios for the period
ending December 31, 2012 were Total
Risk Based Capital Ratio of 13.6%, Tier I Capital Ratio of 12.4%
and Leverage Ratio of 9.8%, all of which soundly exceed the current
"well capitalized" regulatory requirements.
Net interest income was $20.6
million for the year ended December
31, 2012, a less than 1% change, or $202 thousand below the $20.8 million earned in 2011, a reasonable result
achieved from efforts to mitigate margin pressure caused by
operating during significant economic and political uncertainties
during a year which mid-to long-term interest rates were lowered to
historical low levels. As a result, net interest margin
declined 9 basis points to 3.80% for 2012 from 3.89% for 2011.
Net interest income was $5.2
million for the quarter ended December 31, 2012, compared to the $5.0 million recorded during the same quarter of
2011. The cost reductions on lower interest-bearing
liabilities coupled with lower deposit rates, plus the larger loan
portfolio, more than offset the persistent effect low rates had on
reducing earning-asset yields. Utilizing low yield cash to fund
higher yielding loans during the past year improved the fourth
quarter 2012 net interest margin to 3.86%, compared to 3.67% for
same 2011 period.
The provision for loan losses was $2.7
million for the 2012 year, compared to $1.8 million required in 2011. The efforts
to resolve asset quality, addressing the migration of commercial
credits to non-performing status, including reaching a resolution
on several substandard and non-accrual credits, necessitated the
added requirement to increase the provision for loan losses
$850 thousand.
The provision for loan losses was $650
thousand for the fourth quarter of 2012 compared to the
$450 thousand required for the fourth
quarter of 2011. Replenishing the allowance for loan losses
from charge-off activity taken during the fourth quarter of 2012
increased the level of provision for loan losses required when
compared to the fourth quarter of 2011.
Workout efforts proved successful to begin reducing asset
quality issues as the ratio of non-performing assets to total
assets at December 31, 2012 decreased
to 2.94% from 3.58% at December 31,
2011. The ratio of non-accrual loans to total loans at
December 31, 2012 decreased 67
basis-points to 2.73%. Net charge-offs were $2.4 million in 2012 and $1.6 million in 2011. The allowance for
loan losses was 1.89% of total loans at December 31, 2012, down from 1.97% at
December 31, 2011.
Total other income for the year ended December 31, 2012 was $7.6
million, compared to $5.9
million for the 2011 year. The additional $967 thousand from significantly higher profit
margin on mortgage banking activities, $302
thousand more loan service charges, along with growth of
$192 thousand from trust activity and
$118 thousand more interchange
transaction fees plus $265 thousand
of gains recognized on securities, collectively, pushed other
income up by $1.7 million.
Total other income recorded for the quarter ended December 31, 2012 was a $1.8 million compared with $1.6 million for the same quarter in 2011.
The $167 thousand increase
primarily occurred from higher mortgage banking and more
interchange activity during the quarter.
Total other operating expenses remained basically even, except
for the $236 thousand long-term debt
pre-payment fee and $63 thousand in
other real estate costs which increased other expenses to
$18.4 million for the year ending
December 31, 2012, compared to
$18.0 million for the 2011 year. The
reductions in occupancy and equipment expenses and FDIC assessment
almost offset increased salary and benefits and marketing
expenses.
Total other operating expenses increased $103 thousand, or 2%, to $4.6 million from $4.5
million for the quarters ending December 31, 2012 and 2011, respectively.
The other operating expenses primarily increased from higher
salaries and benefits and added costs from more other real estate
owned.
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.
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 effects of new laws and regulations, specifically the
impact of the Dodd-Frank Wall Street Reform and Consumer Protection
Act;
- 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 the Company'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.
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, 2012
|
December 31, 2011
|
Assets
|
|
|
Total cash and cash
equivalents
|
$
21,846
|
$
52,165
|
Investment securities
|
100,730
|
108,543
|
Federal Home Loan Bank Stock
|
2,624
|
3,699
|
Loans and leases
|
444,101
|
410,831
|
Allowance for loan losses
|
(8,372)
|
(8,108)
|
Premises and equipment, net
|
14,127
|
13,575
|
Life insurance cash surrender
value
|
10,065
|
9,740
|
Other assets
|
16,800
|
16,297
|
|
|
|
Total
assets
|
$
601,921
|
$
606,742
|
|
|
|
Liabilities
|
|
|
Non-interest-bearing deposits
|
$
126,035
|
$
96,155
|
Interest-bearing deposits
|
388,625
|
419,647
|
Total
deposits
|
514,660
|
515,802
|
Short-term borrowings
|
8,056
|
9,507
|
Long-term debt
|
16,000
|
21,000
|
Other liabilities
|
3,863
|
6,809
|
Total
liabilities
|
542,579
|
553,118
|
|
|
|
Shareholders' equity
|
59,342
|
53,624
|
|
|
|
Total liabilities
and shareholders' equity
|
$
601,921
|
$
606,742
|
|
|
|
|
|
|
Average
Year-To-Date Balances:
|
December 31, 2012
|
December 31, 2011
|
Assets
|
|
|
Total cash and cash
equivalents
|
$
37,022
|
$
50,325
|
Investment securities
|
112,712
|
101,184
|
Loans and leases, net
|
418,287
|
403,704
|
Premises and equipment, net
|
13,943
|
14,188
|
Other assets
|
26,522
|
26,926
|
|
|
|
Total
assets
|
$
608,486
|
$
596,327
|
|
|
|
Liabilities
|
|
|
Non-interest-bearing deposits
|
$
111,458
|
$
102,441
|
Interest-bearing deposits
|
406,948
|
406,568
|
Total
deposits
|
518,406
|
509,009
|
Short-term borrowings and long-term
debt
|
29,794
|
33,630
|
Other liabilities
|
3,390
|
3,290
|
Total
liabilities
|
551,590
|
545,929
|
|
|
|
Shareholders' equity
|
56,896
|
50,398
|
|
|
|
Total liabilities
and shareholders' equity
|
$
608,486
|
$
596,327
|
FIDELITY D & D BANCORP, INC.
|
Unaudited
Condensed Consolidated Statements of Income
|
(dollars
in thousands)
|
|
Three
Months Ended
|
Twelve
Months Ended
|
|
|
Dec.
31, 2012
|
Dec.
31, 2011
|
Dec.
31, 2012
|
Dec.
31, 2011
|
|
Interest income
|
|
|
|
|
|
Loans and leases
|
$
5,455
|
$
5,405
|
$
21,699
|
$
22,906
|
|
Securities and
other
|
522
|
674
|
2,295
|
2,697
|
|
|
|
|
|
|
|
Total
interest income
|
5,977
|
6,079
|
23,994
|
25,603
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
Deposits
|
553
|
763
|
2,439
|
3,672
|
|
Borrowings and
debt
|
221
|
274
|
915
|
1,089
|
|
|
|
|
|
|
|
Total
interest expense
|
774
|
1,037
|
3,354
|
4,761
|
|
|
|
|
|
|
|
Net interest
income
|
5,203
|
5,042
|
20,640
|
20,842
|
|
|
|
|
|
|
|
Provision for loan
losses
|
650
|
450
|
2,650
|
1,800
|
|
OTTI - credit
losses
|
-
|
165
|
136
|
246
|
|
Other income
|
1,818
|
1,651
|
7,645
|
5,938
|
|
Other expenses
|
4,594
|
4,491
|
18,438
|
18,044
|
|
Provision for income
taxes
|
452
|
385
|
1,763
|
1,645
|
|
Net
income
|
$
1,325
|
$
1,202
|
$
5,298
|
$
5,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Dec.
31, 2012
|
Sep.
30, 2012
|
Jun.
30, 2012
|
Mar.
31, 2012
|
Dec.
31, 2011
|
Interest income
|
|
|
|
|
|
Loans and leases
|
$
5,455
|
$
5,420
|
$
5,408
|
$
5,415
|
$
5,405
|
Securities and
other
|
522
|
554
|
583
|
637
|
674
|
|
|
|
|
|
|
Total
interest income
|
5,977
|
5,974
|
5,991
|
6,052
|
6,079
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
|
Deposits
|
553
|
585
|
617
|
684
|
763
|
Borrowings and
debt
|
221
|
219
|
221
|
254
|
274
|
|
|
|
|
|
|
Total
interest expense
|
774
|
804
|
838
|
938
|
1,037
|
|
|
|
|
|
|
Net interest
income
|
5,203
|
5,170
|
5,153
|
5,114
|
5,042
|
|
|
|
|
|
|
Provision for loan
losses
|
650
|
700
|
600
|
700
|
450
|
OTTI - credit
losses
|
-
|
-
|
31
|
105
|
165
|
Other income
|
1,818
|
1,868
|
1,903
|
2,056
|
1,651
|
Other expenses
|
4,594
|
4,453
|
4,678
|
4,713
|
4,491
|
Provision for income
taxes
|
452
|
486
|
430
|
395
|
385
|
Net
income
|
$
1,325
|
$
1,399
|
$
1,317
|
$
1,257
|
$
1,202
|
FIDELITY D & D BANCORP,
INC.
|
Unaudited
Condensed Consolidated Balance Sheets
|
(dollars
in thousands)
|
|
|
|
|
|
|
At
Period End:
|
Dec.
31, 2012
|
Sep.
30, 2012
|
Jun.
30, 2012
|
Mar.
31, 2012
|
Dec.
31, 2011
|
Assets
|
|
|
|
|
|
Total cash and cash
equivalents
|
$
21,846
|
$
45,622
|
$
22,791
|
$
65,681
|
$
52,165
|
Investment securities
|
100,730
|
103,135
|
110,809
|
115,367
|
108,543
|
Federal Home Loan Bank Stock
|
2,624
|
3,019
|
3,339
|
3,514
|
3,699
|
Loans and leases
|
444,101
|
430,914
|
426,118
|
422,272
|
410,831
|
Allowance for loan losses
|
(8,372)
|
(8,142)
|
(8,151)
|
(8,320)
|
(8,108)
|
Premises and equipment, net
|
14,127
|
14,270
|
13,686
|
13,942
|
13,575
|
Life insurance cash surrender
value
|
10,065
|
9,984
|
9,901
|
9,819
|
9,740
|
Other assets
|
16,800
|
16,645
|
17,243
|
17,005
|
16,297
|
|
|
|
|
|
|
Total
assets
|
$
601,921
|
$
615,447
|
$
595,736
|
$
639,280
|
$
606,742
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Non-interest-bearing deposits
|
$
126,035
|
$
114,653
|
$
110,283
|
$
129,041
|
$
96,155
|
Interest-bearing deposits
|
388,625
|
409,467
|
401,787
|
419,124
|
419,647
|
Total
deposits
|
514,660
|
524,120
|
512,070
|
548,165
|
515,802
|
Short-term borrowings
|
8,056
|
14,069
|
8,106
|
17,238
|
9,507
|
Long-term debt
|
16,000
|
16,000
|
16,000
|
16,000
|
21,000
|
Other liabilities
|
3,863
|
2,705
|
2,997
|
2,900
|
6,809
|
Total
liabilities
|
542,579
|
556,894
|
539,173
|
584,303
|
553,118
|
|
|
|
|
|
|
Shareholders' equity
|
59,342
|
58,553
|
56,563
|
54,977
|
53,624
|
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
$
601,921
|
$
615,447
|
$
595,736
|
$
639,280
|
$
606,742
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Quarterly Balances:
|
Dec.
31, 2012
|
Sep.
30, 2012
|
Jun.
30, 2012
|
Mar.
31, 2012
|
Dec.
31, 2011
|
Assets
|
|
|
|
|
|
Total cash and cash
equivalents
|
$
27,674
|
$
32,254
|
$
32,037
|
$
56,277
|
$
53,814
|
Investment securities
|
107,021
|
111,112
|
118,721
|
114,076
|
112,554
|
Loans and leases, net
|
426,040
|
423,250
|
416,755
|
406,962
|
402,093
|
Premises and equipment, net
|
14,266
|
14,132
|
13,855
|
13,516
|
13,746
|
Other assets
|
26,662
|
26,938
|
26,680
|
25,801
|
26,688
|
|
|
|
|
|
|
Total
assets
|
$
601,663
|
$
607,686
|
$
608,048
|
$
616,632
|
$
608,895
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Non-interest-bearing deposits
|
$
117,025
|
$
111,781
|
$
109,785
|
$
107,175
|
$
99,973
|
Interest-bearing deposits
|
393,319
|
407,335
|
411,088
|
416,195
|
417,210
|
Total
deposits
|
510,344
|
519,116
|
520,873
|
523,370
|
517,183
|
Short-term borrowings and long-term
debt
|
28,527
|
27,616
|
27,954
|
35,117
|
35,114
|
Other liabilities
|
3,549
|
3,390
|
3,266
|
3,355
|
3,658
|
Total
liabilities
|
542,420
|
550,122
|
552,093
|
561,842
|
555,955
|
|
|
|
|
|
|
Shareholders' equity
|
59,243
|
57,564
|
55,955
|
54,790
|
52,940
|
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
$
601,663
|
$
607,686
|
$
608,048
|
$
616,632
|
$
608,895
|
FIDELITY D & D BANCORP, INC.
|
Selected Financial Ratios and Other
Data
|
|
|
|
|
|
Three
Months Ended
|
|
Dec.
31, 2012
|
Sep.
30, 2012
|
Jun.
30, 2012
|
Mar.
31, 2012
|
Dec.
31, 2011
|
Selected returns and financial
ratios
|
|
|
|
|
|
Diluted earnings per share
|
$
0.58
|
$
0.61
|
$
0.57
|
$
0.56
|
$
0.54
|
Dividends per share
|
$
0.25
|
$
0.25
|
$
0.25
|
$
0.25
|
$
0.25
|
Yield on interest-earning assets
(FTE)
|
4.41%
|
4.36%
|
4.41%
|
4.39%
|
4.39%
|
Cost of interest-bearing
liabilities
|
0.73%
|
0.74%
|
0.77%
|
0.84%
|
0.91%
|
Net interest spread
|
3.68%
|
3.62%
|
3.64%
|
3.55%
|
3.48%
|
Net interest margin
|
3.86%
|
3.79%
|
3.81%
|
3.73%
|
3.67%
|
Return on average assets
|
0.88%
|
0.92%
|
0.87%
|
0.82%
|
0.78%
|
Return on average equity
|
8.90%
|
9.67%
|
9.47%
|
9.23%
|
9.01%
|
Efficiency ratio
|
64.44%
|
61.74%
|
64.54%
|
62.89%
|
65.35%
|
Expense ratio
|
1.88%
|
1.69%
|
1.84%
|
1.74%
|
1.88%
|
|
|
|
|
|
|
|
Twelve
Months Ended
|
|
|
|
|
Dec.
31, 2012
|
Dec.
31, 2011
|
|
|
|
Diluted earnings per share
|
$
2.32
|
$
2.28
|
|
|
|
Dividends per share
|
$
1.00
|
$
1.00
|
|
|
|
Yield on interest-earning assets
(FTE)
|
4.39%
|
4.75%
|
|
|
|
Cost of interest-bearing
liabilities
|
0.77%
|
1.08%
|
|
|
|
Net interest spread
|
3.62%
|
3.67%
|
|
|
|
Net interest margin
|
3.80%
|
3.89%
|
|
|
|
Return on average assets
|
0.87%
|
0.85%
|
|
|
|
Return on average equity
|
9.31%
|
10.01%
|
|
|
|
Efficiency ratio
|
63.40%
|
65.47%
|
|
|
|
Expense ratio
|
1.78%
|
2.04%
|
|
|
|
|
|
|
|
|
|
Other
data
|
|
|
|
|
|
|
Dec.
31, 2012
|
Sep.
30, 2012
|
Jun.
30, 2012
|
Mar.
31, 2012
|
Dec.
31, 2011
|
Book value per share
|
$
25.54
|
$
25.37
|
$
24.69
|
$
24.18
|
$
23.78
|
Equity to assets
|
9.86%
|
9.51%
|
9.49%
|
8.60%
|
8.84%
|
Allowance for loan losses to:
|
|
|
|
|
|
Total loans
|
1.89%
|
1.89%
|
1.91%
|
1.97%
|
1.97%
|
Non-accrual
loans
|
0.69x
|
0.65x
|
0.60x
|
0.65x
|
0.58x
|
Non-accrual loans to total
loans
|
2.73%
|
2.89%
|
3.16%
|
3.04%
|
3.40%
|
Non-performing assets to total
assets
|
2.94%
|
2.72%
|
3.70%
|
3.32%
|
3.58%
|
SOURCE Fidelity D & D Bancorp, Inc.