Fidelity D & D Bancorp, Inc. Reports Second Quarter 2023 Financial Results


DUNMORE, Pa., July 26, 2023 (GLOBE NEWSWIRE) -- Fidelity D & D Bancorp, Inc. (NASDAQ: FDBC) and its banking subsidiary, The Fidelity Deposit and Discount Bank, announced its unaudited, consolidated financial results for the three and six-month periods ended June 30, 2023.

Unaudited Financial Information

Net income for the quarter ended June 30, 2023 was $5.4 million, or $0.94 diluted earnings per share, compared to $7.7 million, or $1.35 diluted earnings per share, for the quarter ended June 30, 2022. The $2.3 million decline in net income resulted primarily from the $2.7 million decline in net interest income, led primarily from higher interest expense, and $0.6 million higher non-interest expenses, partially offset by $0.8 million lower provision for income taxes and $0.3 million more non-interest income.

“Despite the challenging operating environment, the bank produced strong loan growth, grew non-interest income, maintained excellent asset quality, and controlled expenses. While the rising costs of deposits and borrowed funds resulted in decreased earnings this quarter, our continued focus on a well-executed strategic plan sets the stage for future growth,” stated Daniel J. Santaniello, President and Chief Executive Officer.

He continued, “Fidelity Bank continues to make prudent investments based on a relationship banking strategy, attracting new retail and business households. Our strong capital position, and commitment to the communities we serve provide the foundation for consistent financial performance.”

For the six months ended June 30, 2023, net income was $12.4 million, or $2.18 diluted earnings per share, compared to $15.2 million, or $2.67 diluted earnings per share, for the six months ended June 30, 2022. The $2.8 million, or 18% decline in net income stemmed from the $2.9 million reduction in net interest income and $0.8 million higher non-interest expenses partially offset by $0.7 million lower provision for income taxes and $0.2 million higher non-interest income.

Consolidated Second Quarter Operating Results Overview

Net interest income was $15.4 million for the second quarter of 2023, a 15% decrease over the $18.1 million earned for the second quarter of 2022. The $2.7 million decline in net interest income resulted primarily from the increase of $6.6 million in interest expense primarily due to a 146 basis point increase in the rates paid on interest-bearing deposits which resulted in $5.7 million in additional interest expense. The Company also required $64.4 million more in average short-term borrowings during the second quarter of 2023 which contributed $0.8 million in additional interest expense compared to the second quarter of 2022. Partially offsetting the higher interest expense, interest income grew $3.9 million primarily due to a $47.4 million increase in the average balance of interest-earning assets and a 62 basis point increase in fully-taxable equivalent ("FTE") yields on these earning assets. The loan portfolio had the biggest impact, producing a $4.3 million increase in FTE interest income from $142.9 million in higher average balances and an increase of 69 basis points in FTE yields earned on loans. FTE interest income in the commercial portfolio increased $2.2 million during the second quarter of 2023 versus the second quarter of 2022, despite the recognition of $0.5 million less Small Business Administration ("SBA") fees attributable to Paycheck Protection Program ("PPP") loans over the comparative period.

The overall cost of interest-bearing liabilities was 1.84% for the second quarter of 2023, an increase of 161 basis points from the 0.23% paid for the second quarter of 2022. The cost of funds increased 120 basis points to 1.37% for the second quarter of 2023 from 0.17% for the second quarter of 2022. The Company’s FTE (non-GAAP measurement) net interest spread was 2.28% for the second quarter of 2023, down 99 basis points from the 3.27% recorded for the second quarter of 2022. FTE net interest margin decreased by 52 basis points to 2.82% for the three months ended June 30, 2023 from 3.34% for the same 2022 period due to the increase in rates paid on interest-bearing liabilities growing at a faster pace than the yields on interest-earning assets.

The provision for credit losses on loans was $0.7 million partially offset by the credit for credit losses on unfunded loan commitments of $0.1 million for the second quarter of 2023. For the three months ended June 30, 2023, the decrease in the allowance for credit losses on unfunded commitments was due to a reduction in unfunded commitments during the quarter. For the three months ended June 30, 2023, the increase in the allowance for credit losses on loans was due to growth and change in composition of the loan portfolio.

Total non-interest income increased $0.3 million, or 7%, to $4.5 million for the second quarter of 2023 compared to $4.2 million for the second quarter of 2022. The increase in non-interest income was primarily attributable to $0.3 million in fee income from commercial loans. There was also $0.2 million in additional fee income on deposits, $0.1 million higher trust income and a $0.1 million recovery recorded from an acquired charged-off loan during the second quarter of 2023. Partially offsetting these increases was $0.2 million less in gains on the sale of loans due to lower mortgage production. The Company also had $0.2 million in losses on the write-down of premises and equipment during the second quarter of 2023 from a branch closure with the property moved to held-for-sale.

Non-interest expenses increased $0.6 million, or 5%, for the second quarter of 2023 to $13.4 million from $12.8 million for the same quarter of 2022. Premises and equipment expenses increased by $0.4 million quarter-over-quarter from additional equipment and software subscription related expenses. Professional service expenses increased $0.3 million from higher professional and legal fees. There was also an increase of $0.3 million in FDIC insurance premium expense and an increase of $0.2 million in fraud losses experienced during the second quarter of 2023. These increases were partially offset by decreases of $0.5 million in salaries and employee benefit expenses and $0.1 million in PA shares tax expense. 

The provision for income taxes decreased $0.8 million during the second quarter of 2023 due to an increase in tax credits from leasing plug-in hybrid electric vehicles as well as the lower level of operating income compared to the second quarter of 2022.

Consolidated Year-To-Date Operating Results Overview

Net interest income was $32.5 million for the six months ended June 30, 2023 compared to $35.4 million for the six months ended June 30, 2022. The $2.9 million, or 8%, reduction was the result of interest expense growing faster than interest income. On the asset side, the loan portfolio caused interest income growth by producing $8.4 million more interest income from an increase of 71 basis points in FTE loan yields on $142.6 million in higher average balances. Interest income in the commercial portfolio increased $4.5 million during the six months ended June 30, 2023 compared to the same 2022 period, despite recognition of $1.7 million less SBA fees attributable to PPP loans over the same time periods. Interest income from investments decreased $0.5 million from the $64.3 million lower average balance in the portfolio. On the funding side, interest expense increased by $11.0 million primarily due to a higher rate paid on interest-bearing deposits. The Company also required $56.7 million more in average short-term borrowings which added $1.4 million in interest expense. FTE net interest spread was 2.50% for the first half of 2023, or 69 basis points lower than the 3.19% recorded for the first half of 2022. Over the same time period, the Company’s FTE net interest margin decreased by 29 basis points to 2.97% from 3.26%.

The provision for credit losses on loans was $0.9 million and the provision for credit losses on unfunded loan commitments was $0.2 million for the first six months of 2023. During the first quarter of 2023, the Company adopted Accounting Standard Update 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (CECL). Upon adoption on January 1, 2023, the Company recorded an increase of $0.7 million in the allowance for credit losses on loans and an increase of $1.1 million in the allowance for credit losses on unfunded loan commitments. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. For the six months ended June 30, 2023, the increase in the allowance for credit losses on unfunded commitments was due to six large unfunded commercial loan commitments originated during the year. For the six months ended June 30, 2023, the increase in the allowance for credit losses on loans was due to growth in the loan portfolio.

Total non-interest income for the six months ended June 30, 2023 was $9.0 million, an increase of $0.2 million, or 2%, from $8.8 million for the six months ended June 30, 2022. The increase in other income was primarily due to $0.3 million in recoveries from acquired charged-off loans, $0.3 million more service charges on deposits, $0.2 million higher commercial fees, $0.2 million in additional trust fiduciary fees and $0.1 million more debit card interchange fees. Partially offsetting these increases were decreases as follows: $0.8 million lower gains on loan sales and $0.2 million less service charges on loans due primarily to a decline in residential mortgage activity.

Non-interest expenses increased to $26.3 million for the six months ended June 30, 2023, an increase of $0.8 million, or 3%, from $25.5 million for the six months ended June 30, 2022. The largest drivers of this increase were a $0.6 million increase in premises and equipment expenses, $0.5 million more in professional services, $0.3 million in additional fraud losses, and a $0.2 million increase in FDIC assessment expenses. These increases were partially offset by $0.7 million less salaries and employee benefit expenses and $0.3 million lower PA shares tax expense. 

The provision for income taxes decreased $0.7 million during first half of 2023 compared to the same 2022 period due to an increase in tax credits and the lower income before taxes. 

Consolidated Balance Sheet & Asset Quality Overview

The Company’s total assets grew to $2.4 billion as of June 30, 2023, an increase of $63 million from December 31, 2022. Growth in the loan portfolio of $64 million and $41 million of cash and cash equivalents was offset by a reduction of the investment portfolio by $39 million. The decline in the investment portfolio was primarily due to sales of $31 million in securities partially offset by a $6 million improvement in market value of available-for-sale securities. During the first six months of 2023, the market value of held-to-maturity securities also improved by $4 million, with $31 million in unrealized losses at June 30, 2023. During the same time period, total liabilities increased $48 million, or 2%. Growth of $63 million in short-term borrowings replaced deposit declines of $15 million with the remaining balance used to fund loan growth with the excess increasing cash balances. Transactional deposit balances are down primarily from customers' investing part of their funds in higher yields and increased consumer spending. The reduction was partially mitigated through the promotional CD offerings during the first half of 2023. As of June 30, 2023, the ratio of insured and collateralized deposits to total deposits was approximately 77%.

Shareholders’ equity increased $14.8 million, or 9%, to $177.7 million at June 30, 2023 from $162.9 million at December 31, 2022. The increase was caused by a $5.9 million, after tax, improvement in accumulated other comprehensive income from lower net unrealized losses recorded on available-for-sale investment securities. At June 30, 2023, there were no securities identified with credit-related, other-than-temporary impairment losses. Accumulated other comprehensive income (loss) is excluded from regulatory capital ratios. Retained earnings also improved from net income of $12.4 million, partially offset by $4.1 million in cash dividends paid to shareholders. An additional $2.0 million was recorded from the issuance of common stock under the Company’s stock plans and stock-based compensation expense. Partially offsetting these increases, a cumulative-effect adjustment was made for adoption of ASU 2016-13 during the first quarter of 2023 which reduced retained earnings by $1.3 million. The Company remains well capitalized with Tier 1 capital at 9.08% of total average assets as of June 30, 2023. Total risk-based capital was 14.71% of risk-weighted assets and Tier 1 risk-based capital was 13.52% of risk-weighted assets as of June 30, 2023. Tangible book value per share was $27.59 at June 30, 2023 compared to $25.18 at December 31, 2022. Tangible common equity was 6.48% of total assets at June 30, 2023 compared to 6.01% at December 31, 2022.

Asset Quality

Total non-performing assets were $3.5 million, or 0.15% of total assets, at June 30, 2023, compared to $2.7 million, or 0.12% of total assets, at December 31, 2022. Based on the Company’s adoption of ASU 2022-02, Financial Instruments-Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures, the recognition and measurement guidance related to troubled debt restructurings (TDR) has been eliminated. As such, TDRs were removed from non-performing assets at June 30, 2023 and December 31, 2022 above to adhere to this standard and provide better comparability. Past due and non-accrual loans to total loans were 0.29% at June 30, 2023 compared to 0.28% at December 31, 2022. Net charge-offs to average total loans were 0.05% at June 30, 2023 compared to 0.04% at December 31, 2022. 

About Fidelity D & D Bancorp, Inc. and The Fidelity Deposit and Discount Bank

Fidelity D & D Bancorp, Inc. has built a strong history as trusted financial advisor to the clients served by The Fidelity Deposit and Discount Bank (“Fidelity Bank”). Fidelity Bank continues its mission of exceeding client expectations through a unique banking experience. It operates 20 full-service offices throughout Lackawanna, Luzerne, Lehigh and Northampton Counties, along with a limited production commercial office in Luzerne County and a Fidelity Bank Wealth Management Office in Schuylkill County. Fidelity Bank provides a digital banking experience online at www.bankatfidelity.com, through the Fidelity Mobile Banking app, and in the Client Care Center at 1-800-388-4380. Additionally, the Bank offers full-service Wealth Management & Brokerage Services, a Mortgage Center, and an array of personal and business banking products and services. Part of the Company’s vision is to serve as the best bank for the community, which was accomplished by having provided over 4,100 hours of volunteer time and over $1.7 million in donations to non-profit organizations directly within the markets served throughout 2022. Fidelity Bank's deposits are insured by the Federal Deposit Insurance Corporation up to the full extent permitted by law.

Non-GAAP Financial Measures

The Company uses non-GAAP financial measures to provide information useful to the reader in understanding its operating performance and trends, and to facilitate comparisons with the performance of other financial institutions. Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities. The Company’s non-GAAP financial measures and key performance indicators may differ from the non-GAAP financial measures and key performance indicators other financial institutions use to measure their performance and trends. Non-GAAP financial measures should be supplemental to GAAP used to prepare the Company’s operating results and should not be read in isolation or relied upon as a substitute for GAAP measures. Reconciliations of non-GAAP financial measures to GAAP are presented in the tables below.

Interest income was adjusted to recognize the income from tax exempt interest-earning assets as if the interest was taxable, fully-taxable equivalent (FTE), in order to calculate certain ratios within this document. This treatment allows a uniform comparison among yields on interest-earning assets. Interest income was FTE adjusted, using the corporate federal tax rate of 21% for 2023 and 2022.

Forward-looking statements

Certain of the matters discussed in this press release 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:

 local, regional and national economic conditions and changes thereto;
 the short-term and long-term effects of inflation, and rising costs to the Company, its customers and on the economy;
 the risks of changes and volatility of 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;
 securities markets and monetary fluctuations and volatility;
 impacts of the 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 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 laws and regulations concerning taxes, banking, securities and insurance and their application with which the Company and its subsidiaries must comply;
 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 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;


 the effects of economic conditions of any other pandemic, epidemic or other health-related crisis such as COVID-19 and responses thereto on current customers and the operations of the Company, specifically the effect of the economy on loan customers’ ability to repay loans;
 the effects of bank failures, banking system instability, deposit fluctuations, loan and securities value changes;
 technological changes;
 ■ the interruption or breach in security of our information systems, continually evolving cybersecurity 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;
 ■ 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.

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.

Contacts: 
  
Daniel J. SantanielloSalvatore R. DeFrancesco, Jr.
President and Chief Executive OfficerTreasurer and Chief Financial Officer
570-504-8035570-504-8000

 

FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Balance Sheets
(dollars in thousands)
At Period End: June 30, 2023  December 31, 2022 
Assets        
Cash and cash equivalents $69,632  $29,091 
Investment securities  604,264   643,606 
Restricted investments in bank stock  3,728   5,268 
Loans and leases  1,631,472   1,565,811 
Allowance for credit losses on loans  (18,350)  (17,149)
Premises and equipment, net  31,329   31,307 
Life insurance cash surrender value  53,892   54,035 
Goodwill and core deposit intangible  20,981   21,168 
Other assets  44,284   45,235 
         
Total assets $2,441,232  $2,378,372 
         
Liabilities        
Non-interest-bearing deposits $582,473  $602,608 
Interest-bearing deposits  1,569,519   1,564,305 
Total deposits  2,151,992   2,166,913 
Short-term borrowings  76,111   12,940 
Secured borrowings  7,498   7,619 
Other liabilities  27,887   27,950 
Total liabilities  2,263,488   2,215,422 
         
Shareholders' equity  177,744   162,950 
         
Total liabilities and shareholders' equity $2,441,232  $2,378,372 


Average Year-To-Date Balances: June 30, 2023  December 31, 2022 
Assets        
Cash and cash equivalents $33,180  $81,532 
Investment securities  616,516   684,588 
Restricted investments in bank stock  4,622   3,565 
Loans and leases  1,617,626   1,500,796 
Allowance for credit losses on loans  (18,338)  (16,612)
Premises and equipment, net  31,735   30,640 
Life insurance cash surrender value  53,888   53,443 
Goodwill and core deposit intangible  21,069   21,359 
Other assets  43,157   40,265 
         
Total assets $2,403,455  $2,399,576 
         
Liabilities        
Non-interest-bearing deposits $577,045  $594,541 
Interest-bearing deposits  1,560,318   1,593,805 
Total deposits  2,137,363   2,188,346 
Short-term borrowings  56,791   1,031 
Secured borrowings  7,538   8,886 
Other liabilities  29,565   28,434 
Total liabilities  2,231,257   2,226,697 
         
Shareholders' equity  172,198   172,879 
         
Total liabilities and shareholders' equity $2,403,455  $2,399,576 

 

FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Statements of Income
(dollars in thousands)
  Three Months Ended  Six Months Ended 
  Jun. 30, 2023  Jun. 30, 2022  Jun. 30, 2023  Jun. 30, 2022 
Interest income                
Loans and leases $19,703  $15,500  $38,721  $30,275 
Securities and other  3,276   3,565   6,596   6,969 
                 
Total interest income  22,979   19,065   45,317   37,244 
                 
Interest expense                
Deposits  (6,607)  (950)  (11,225)  (1,772)
Borrowings and debt  (890)  30   (1,585)  (35)
                 
Total interest expense  (7,497)  (920)  (12,810)  (1,807)
                 
Net interest income  15,482   18,145   32,507   35,437 
                 
Provision for credit losses on loans  (675)  (525)  (855)  (1,050)
(Provision) credit for credit losses on unfunded loan commitments  50   7   (175)  18 
Non-interest income  4,535   4,256   9,023   8,810 
Non-interest expense  (13,425)  (12,807)  (26,281)  (25,472)
                 
Income before income taxes  5,967   9,076   14,219   17,743 
                 
Provision for income taxes  (605)  (1,412)  (1,817)  (2,556)
Net income $5,362  $7,664  $12,402  $15,187 


  Three Months Ended 
  Jun. 30, 2023  Mar. 31, 2023  Dec. 31, 2022  Sep. 30, 2022  Jun. 30, 2022 
Interest income                    
Loans and leases $19,703  $19,018  $17,425  $16,320  $15,500 
Securities and other  3,276   3,320   3,869   3,815   3,565 
                     
Total interest income  22,979   22,338   21,294   20,135   19,065 
                     
Interest expense                    
Deposits  (6,607)  (4,618)  (2,822)  (1,550)  (950)
Borrowings and debt  (890)  (695)  (145)  (75)  30 
                     
Total interest expense  (7,497)  (5,313)  (2,967)  (1,625)  (920)
                     
Net interest income  15,482   17,025   18,327   18,510   18,145 
                     
Provision for credit losses on loans  (675)  (180)  (525)  (525)  (525)
(Provision) credit for credit losses on unfunded loan commitments  50   (225)  (11)  6   7 
Non-interest income  4,535   4,489   3,920   3,911   4,256 
Non-interest expense  (13,425)  (12,857)  (12,854)  (13,034)  (12,807)
                     
Income before income taxes  5,967   8,252   8,857   8,868   9,076 
                     
Provision for income taxes  (605)  (1,212)  (1,711)  (1,179)  (1,412)
Net income $5,362  $7,040  $7,146  $7,689  $7,664 

 

FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Balance Sheets
(dollars in thousands)
At Period End: Jun. 30, 2023  Mar. 31, 2023  Dec. 31, 2022  Sep. 30, 2022  Jun. 30, 2022 
Assets                    
Cash and cash equivalents $69,632  $63,038  $29,091  $134,042  $109,125 
Investment securities  604,264   614,526   643,606   635,787   674,833 
Restricted investments in bank stock  3,728   5,968   5,268   3,639   3,622 
Loans and leases  1,631,472   1,627,155   1,565,811   1,524,328   1,494,316 
Allowance for credit losses on loans  (18,350)  (17,910)  (17,149)  (16,779)  (16,590)
Premises and equipment, net  31,329   31,408   31,307   30,971   30,855 
Life insurance cash surrender value  53,892   53,567   54,035   53,711   53,383 
Goodwill and core deposit intangible  20,981   21,071   21,168   21,264   21,360 
Other assets  44,284   44,198   45,235   48,805   44,036 
                     
Total assets $2,441,232  $2,443,021  $2,378,372  $2,435,768  $2,414,940 
                     
Liabilities                    
Non-interest-bearing deposits $582,473  $591,055  $602,608  $616,844  $610,987 
Interest-bearing deposits  1,569,519   1,552,036   1,564,305   1,636,389   1,606,637 
Total deposits  2,151,992   2,143,091   2,166,913   2,253,233   2,217,624 
Short-term borrowings  76,111   88,989   12,940   10   10 
Secured borrowings  7,498   7,560   7,619   7,688   7,736 
Other liabilities  27,887   27,494   27,950   28,350   26,951 
Total liabilities  2,263,488   2,267,134   2,215,422   2,289,281   2,252,321 
                     
Shareholders' equity  177,744   175,887   162,950   146,487   162,619 
                     
Total liabilities and shareholders' equity $2,441,232  $2,443,021  $2,378,372  $2,435,768  $2,414,940 


Average Quarterly Balances: Jun. 30, 2023  Mar. 31, 2023  Dec. 31, 2022  Sep. 30, 2022  Jun. 30, 2022 
Assets                    
Cash and cash equivalents $37,125  $29,192  $73,023  $88,863  $69,086 
Investment securities  610,009   623,097   637,825   672,595   693,121 
Restricted investments in bank stock  3,834   5,418   3,840   3,645   3,538 
Loans and leases  1,625,509   1,609,655   1,540,999   1,511,268   1,482,629 
Allowance for credit losses on loans  (18,296)  (18,380)  (17,113)  (16,911)  (16,441)
Premises and equipment, net  31,989   31,477   31,190   30,956   31,091 
Life insurance cash surrender value  53,782   53,995   53,925   53,599   53,277 
Goodwill and core deposit intangible  21,018   21,120   21,210   21,308   21,405 
Other assets  42,630   43,690   47,715   42,564   40,878 
                     
Total assets $2,407,600  $2,399,264  $2,392,614  $2,407,887  $2,378,584 
                     
Liabilities                    
Non-interest-bearing deposits $568,202  $585,987  $609,262  $589,227  $593,121 
Interest-bearing deposits  1,561,412   1,559,212   1,589,129   1,614,573   1,579,150 
Total deposits  2,129,614   2,145,199   2,198,391   2,203,800   2,172,271 
Short-term borrowings  64,558   48,937   3,875   10   206 
Secured borrowings  7,529   7,548   7,654   7,707   9,644 
Other liabilities  29,479   29,651   30,489   29,031   27,164 
Total liabilities  2,231,180   2,231,335   2,240,409   2,240,548   2,209,285 
                     
Shareholders' equity  176,420   167,929   152,205   167,339   169,299 
                     
Total liabilities and shareholders' equity $2,407,600  $2,399,264  $2,392,614  $2,407,887  $2,378,584 

 

FIDELITY D & D BANCORP, INC.
Selected Financial Ratios and Other Financial Data
  Three Months Ended 
  Jun. 30, 2023  Mar. 31, 2023  Dec. 31, 2022  Sep. 30, 2022  Jun. 30, 2022 
Selected returns and financial ratios                    
Basic earnings per share $0.95  $1.25  $1.27  $1.36  $1.35 
Diluted earnings per share $0.94  $1.24  $1.26  $1.36  $1.35 
Dividends per share $0.36  $0.36  $0.36  $0.33  $0.33 
Yield on interest-earning assets (FTE)*  4.12%  4.06%  3.78%  3.60%  3.50%
Cost of interest-bearing liabilities  1.84%  1.33%  0.74%  0.40%  0.23%
Cost of funds  1.37%  0.98%  0.53%  0.29%  0.17%
Net interest spread (FTE)*  2.28%  2.73%  3.04%  3.20%  3.27%
Net interest margin (FTE)*  2.82%  3.13%  3.27%  3.32%  3.34%
Return on average assets  0.89%  1.19%  1.18%  1.27%  1.29%
Pre-provision net revenue to average assets*  1.10%  1.46%  1.56%  1.55%  1.62%
Return on average equity  12.19%  17.00%  18.63%  18.23%  18.16%
Return on average tangible equity*  13.84%  19.45%  21.64%  20.89%  20.79%
Efficiency ratio (FTE)*  64.72%  57.72%  56.02%  56.40%  55.49%
Expense ratio  1.48%  1.41%  1.48%  1.51%  1.44%


  Six months ended 
  Jun. 30, 2023  Jun. 30, 2022 
Basic earnings per share $2.19  $2.68 
Diluted earnings per share $2.18  $2.67 
Dividends per share $0.72  $0.66 
Yield on interest-earning assets (FTE)*  4.09%  3.42%
Cost of interest-bearing liabilities  1.59%  0.23%
Cost of funds  1.17%  0.17%
Net interest spread (FTE)*  2.50%  3.19%
Net interest margin (FTE)*  2.97%  3.26%
Return on average assets  1.04%  1.28%
Pre-provision net revenue to average assets*  1.28%  1.58%
Return on average equity  14.52%  16.45%
Return on average tangible equity*  16.55%  18.59%
Efficiency ratio (FTE)*  61.10%  55.86%
Expense ratio  1.45%  1.40%


Other financial data At period end: 
(dollars in thousands except per share data) Jun. 30, 2023  Mar. 31, 2023  Dec. 31, 2022  Sep. 30, 2022  Jun. 30, 2022 
Assets under management $840,068  $809,897  $736,401  $678,431  $619,420 
Book value per share $31.29  $31.05  $28.94  $26.02  $28.77 
Tangible book value per share* $27.59  $27.33  $25.18  $22.24  $24.99 
Equity to assets  7.28%  7.20%  6.85%  6.01%  6.73%
Tangible common equity ratio*  6.48%  6.39%  6.01%  5.19%  5.90%
Allowance for credit losses on loans to:                    
Total loans  1.13%  1.10%  1.10%  1.10%  1.11%
Non-accrual loans 5.25x  5.36x  6.77x  5.23x  5.17x 
Non-accrual loans to total loans  0.21%  0.21%  0.16%  0.20%  0.21%
Non-performing assets to total assets**  0.15%  0.14%  0.17%  0.19%  0.20%
Net charge-offs to average total loans  0.05%  0.04%  0.04%  0.04%  0.01%
                     
Capital Adequacy Ratios                    
Total risk-based capital ratio  14.71%  14.59%  14.35%  14.34%  14.30%
Common equity tier 1 risk-based capital ratio  13.52%  13.42%  13.27%  13.27%  13.21%
Tier 1 risk-based capital ratio  13.52%  13.42%  13.27%  13.27%  13.21%
Leverage ratio  9.08%  8.92%  8.69%  8.51%  8.43%

* Non-GAAP Financial Measures - see reconciliations below
**Note that based on the Company’s adoption of ASU 2022-02, Financial Instruments-Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures, the recognition and measurement guidance related to troubled debt restructurings (TDR) has been eliminated. As such, TDRs were removed from non-performing assets for the current reporting period to adhere to this standard. Prior periods included accruing TDRs in non-performing assets.

FIDELITY D & D BANCORP, INC.
Reconciliations of Non-GAAP Financial Measures to GAAP
 
Reconciliations of Non-GAAP Measures to GAAP Three Months Ended 
(dollars in thousands) Jun. 30, 2023  Mar. 31, 2023  Dec. 31, 2022  Sep. 30, 2022  Jun. 30, 2022 
FTE net interest income (non-GAAP)                    
Interest income (GAAP) $22,979  $22,338  $21,294  $20,135  $19,065 
Adjustment to FTE  725   760   700   687   682 
Interest income adjusted to FTE (non-GAAP)  23,704   23,098   21,994   20,822   19,747 
Interest expense (GAAP)  7,497   5,313   2,967   1,625   920 
Net interest income adjusted to FTE (non-GAAP) $16,207   17,785   19,027   19,197   18,827 
                     
Efficiency Ratio (non-GAAP)                    
Non-interest expenses (GAAP) $13,425  $12,857  $12,854  $13,034  $12,807 
                     
Net interest income (GAAP)  15,482   17,025   18,327   18,510   18,145 
Plus: taxable equivalent adjustment  725   760   700   687   682 
Non-interest income (GAAP)  4,535   4,489   3,920   3,911   4,256 
Net interest income (FTE) plus non-interest income (non-GAAP) $20,742  $22,274  $22,947  $23,108  $23,083 
Efficiency ratio (non-GAAP)  64.72%  57.72%  56.02%  56.40%  55.49%
                     
Tangible Book Value per Share/Tangible Common Equity Ratio (non-GAAP)                    
Total assets (GAAP) $2,441,232  $2,443,021  $2,378,372  $2,435,768  $2,414,940 
Less: Intangible assets, primarily goodwill  (20,981)  (21,071)  (21,167)  (21,264)  (21,360)
Tangible assets  2,420,251   2,421,950   2,357,205   2,414,504   2,393,580 
Total shareholders' equity (GAAP)  177,744   175,887   162,950   146,487   162,619 
Less: Intangible assets, primarily goodwill  (20,981)  (21,071)  (21,167)  (21,264)  (21,360)
Tangible common equity  156,763   154,816   141,783   125,223   141,259 
                     
Common shares outstanding, end of period  5,681,260   5,665,255   5,630,794   5,630,332   5,651,777 
Tangible Common Book Value per Share $27.59  $27.33  $25.18  $22.24  $24.99 
Tangible Common Equity Ratio  6.48%  6.39%  6.01%  5.19%  5.90%
                     
Pre-Provision Net Revenue to Average Assets                    
Income before taxes (GAAP) $5,967  $8,252  $8,857  $8,868  $9,076 
Plus: Provision for credit losses  625   405   536   519   517 
Total pre-provision net revenue (non-GAAP)  6,592   8,657   9,393   9,387   9,593 
Total (annualized) (non-GAAP) $26,440  $35,110  $37,267  $37,240  $38,476 
                     
Average assets $2,407,600  $2,399,264  $2,392,614  $2,407,887  $2,378,584 
Pre-Provision Net Revenue to Average Assets (non-GAAP)  1.10%  1.46%  1.56%  1.55%  1.62%


Reconciliations of Non-GAAP Measures to GAAP Six months ended 
(dollars in thousands) Jun. 30, 2023  Jun. 30, 2022 
FTE net interest income (non-GAAP)        
Interest income (GAAP) $45,317  $37,244 
Adjustment to FTE  1,485   1,350 
Interest income adjusted to FTE (non-GAAP)  46,802   38,594 
Interest expense (GAAP)  12,810   1,807 
Net interest income adjusted to FTE (non-GAAP) $33,992   36,787 
         
Efficiency Ratio (non-GAAP)        
Non-interest expenses (GAAP) $26,281  $25,472 
         
Net interest income (GAAP)  32,507   35,437 
Plus: taxable equivalent adjustment  1,485   1,350 
Non-interest income (GAAP)  9,023   8,810 
Net interest income (FTE) plus non-interest income (non-GAAP) $43,015  $45,597 
Efficiency ratio (non-GAAP)  61.10%  55.86%
         
Pre-Provision Net Revenue to Average Assets        
Income before taxes (GAAP) $14,219  $17,743 
Plus: Provision for credit losses  1,030   1,032 
Total pre-provision net revenue (non-GAAP)  15,249   18,775 
Total (annualized) (non-GAAP) $30,751  $37,861 
         
Average assets $2,403,455  $2,398,890 
Pre-Provision Net Revenue to Average Assets (non-GAAP)  1.28%  1.58%