Fidelity D & D Bancorp, Inc. Reports Improved 2015 Financial Results


DUNMORE, Pa., Feb. 03, 2016 (GLOBE NEWSWIRE) -- Fidelity D & D Bancorp, Inc. (OTCBB: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 $4.1million, 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 resolve 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 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:

  • the effects of economic conditions 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 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;
  • 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;
  • 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;
  • acts of war or terrorism;
  • disruption of credit and equity markets; and
  • 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.

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%
                     



            

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