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


DUNMORE, Pa., Jan. 24, 2024 (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 twelve month periods ended December 31, 2023.

Unaudited Financial Information

Net income recorded for the year ended December 31, 2023 was $18.2 million, or $3.19 diluted earnings per share, compared to $30.0 million, or $5.29 diluted earnings per share, for the year ended December 31, 2022.  The $11.8 million, or 39% decline in net income stemmed from the $10.2 million reduction in net interest income and $5.2 million less non-interest income primarily from losses on the sale of securities partially offset by $3.4 million lower provision for income taxes.

During the fourth quarter of 2023, the Company sold certain available-for-sale securities with a carrying value of $35.6 million for a $6.5 million pre-tax loss in order to deleverage the reliance on short-term borrowings in order to reposition the balance sheet. Excluding the loss on the sale of securities of $5.1 million, net of tax, adjusted net income was $23.3 million, or $4.08 adjusted diluted earnings per share, for the year ended December 31, 2023, a $6.7 million decrease compared to 2022. For more detail on adjusted net income which is a non-GAAP measurement, refer to the “Non-GAAP Measures” table within the Selected Financial Ratios and Other Data section.

“2023 core earnings remained strong as we repositioned the balance sheet to provide flexibility through uncertain economic climates. We continue to execute well,” stated Daniel J. Santaniello, President and Chief Executive Officer. “Our balance sheet and credit quality are strong, and expenses remain well managed. We continue to be focused, disciplined and thoughtful as we execute on our strategic plan. The Fidelity Bankers have demonstrated exemplary efforts and Fidelity Bank is well positioned for the future and committed to our clients, shareholders, and the communities we serve.”

Net income for the quarter ended December 31, 2023 was $0.5 million, or $0.08 diluted earnings per share, compared to $7.1 million, or $1.26 diluted earnings per share, for the quarter ended December 31, 2022.  The $6.6 million, or 93%, decline in net income resulted primarily from $5.9 million lower non-interest income due to the $6.5 million loss on the sale of securities during the fourth quarter of 2023. Net interest income declined $3.4 million which was partially offset by a $2.1 million reduction in the provision for income taxes and $0.4 million less in the provision for credit losses on loans. 

Excluding the loss on the sale of securities of $5.1 million, net of tax, adjusted net income was $5.6 million, or $0.97 adjusted diluted earnings per share, for the quarter ended December 31, 2023, a $1.5 million decrease compared to the same period in 2022. For more detail on adjusted net income which is a non-GAAP measurement, refer to the “Non-GAAP Measures” table within the Selected Financial Ratios and Other Data section.

Consolidated Year-To-Date Operating Results Overview

Net interest income was $62.1 million for the year ended December 31, 2023 compared to $72.3 million for the year ended December 31, 2022.  The $10.2 million, or 14%, decline was the result of interest expense growing faster than interest income.  On the asset side, the loan portfolio caused interest income growth by producing $16.6 million more interest income from an increase of 68 basis points in FTE loan yields on $134.5 million in higher average balances. Interest income in the commercial portfolio increased $9.2 million during the year ended December 31, 2023 compared to the same 2022 period, despite recognition of $1.2 million less Small Business Administration ("SBA") fees attributable to Paycheck Protection Program ("PPP") loans over the same time period.  Interest income from investments decreased $1.1 million from the $67.1 million lower average balance in the portfolio. On the funding side, interest expense increased by $25.4 million primarily due to the 144 basis point higher rate paid on interest-bearing deposits. The Company also required $48.8 million more in average short-term borrowings which added $2.3 million in interest expense. FTE net interest spread was 2.25% for 2023, or 91 basis points lower than the 3.16% recorded for 2022.  Over the same time period, the Company’s FTE net interest margin decreased by 47 basis points to 2.81% from 3.28%.

The provision for credit losses on loans was $1.5 million which was partially offset by a benefit for credit losses on unfunded loan commitments of $0.2 million for 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). The provision for credit losses on loans and unfunded commitments 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 year ended December 31, 2023, the benefit for credit losses on unfunded commitments was due to a reduction in unfunded commitments during the year. For the year ended December 31, 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 for the year ended December 31, 2023 was $11.4 million, a decrease of $5.2 million, or 31%, from $16.6 million for the year ended December 31, 2022. Non-interest income would have increased $1.3 million if not for the $6.5 million loss on the sale of securities during 2023. In addition, the Company also recorded $0.7 million lower gains on loans sold and $0.3 million less service charges on loans.  Partially offsetting these decreases was $0.5 million in additional trust fiduciary fees, $0.5 million more service charges on deposits, $0.3 million in recoveries from acquired charged-off loans, $0.3 million higher commercial swap fees, $0.3 million in additional mortgage servicing fees and $0.2 million more debit card interchange fees.

Non-interest expenses increased to $51.9 million for the year ended December 31, 2023, an increase of $0.5 million, or 1%, from $51.4 million for the year ended December 31, 2022. The largest driver of this increase was a $1.2 million increase in premises and equipment expenses which increased $0.6 million primarily from additional depreciation, equipment maintenance and software subscription related expenses. In addition, the Company incurred $0.5 million more in fraud losses, $0.4 million higher FDIC assessment and a $0.4 million increase in professional service expenses. Partially offsetting these increases, salaries and employee benefits expenses decreased $1.3 million, primarily from less incentive based compensation, and PA shares tax expense declined $0.6 million from a lower capital taxable base.

The provision for income taxes decreased $3.4 million during 2023 compared to 2022 due to a $0.5 million increase in tax credits and the lower income before taxes. 

Consolidated Fourth Quarter Operating Results Overview

Net interest income was $14.9 million for the fourth quarter of 2023, a 19% decrease over the $18.3 million earned for the fourth quarter of 2022.  The $3.4 million decline in net interest income resulted primarily from the $7.0 million increase in interest expense primarily due to a 156 basis point increase in the rates paid on interest-bearing deposits supplemented by $27.7 million higher average balances of interest-bearing deposits. The Company also required $44.6 million more in average short-term borrowings during the fourth quarter of 2023 which contributed $0.5 million in additional interest expense compared to the fourth quarter of 2022. Partially offsetting the higher interest expense, interest income grew $3.5 million primarily due to a $123.9 million increase in the average balance of loans and leases and a 63 basis point increase in fully-taxable equivalent ("FTE") yields earned thereon, producing $4.0 million higher FTE interest income. Partially offsetting the higher interest income in the loan portfolio, interest income from the investment portfolio declined $0.4 million primarily from the decrease of $79.6 million in the average balance of securities.  

The overall cost of interest-bearing liabilities was 2.36% for the fourth quarter of 2023, an increase of 162 basis points from the 0.74% paid for the fourth quarter of 2022.  The cost of funds increased 126 basis points to 1.79% for the fourth quarter of 2023 from 0.53% for the fourth quarter of 2022. The Company’s FTE (non-GAAP measurement) net interest spread was 2.00% for the fourth quarter of 2023, down 104 basis points from the 3.04% recorded for the fourth quarter of 2022.  FTE net interest margin decreased by 61 basis points to 2.66% for the three months ended December 31, 2023 from 3.27% 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. Average non-interest bearing deposits, which impact net interest margin, decreased $75.6 million quarter-over-quarter resulting in the widening gap between spread and margin.

The provision for credit losses on loans was $0.1 million partially offset by a net benefit in the provision for credit losses on unfunded loan commitments of $0.1 million for the fourth quarter of 2023. For the three months ended December 31, 2023, the increase in the provision for credit losses on loans was due to growth and change in composition of the loan portfolio. For the three months ended December 31, 2023, the $0.1 million benefit for credit losses on unfunded commitments was due to a reduction in unfunded commitments during the quarter.

Total non-interest income decreased $5.9 million due to the $6.5 million loss recognized on the sale of securities during the fourth quarter of 2023. Partially offsetting this decrease was the $0.3 million increase in wealth management revenue, $0.1 million in mortgage servicing fees and $0.1 million higher service charges on deposits.

Non-interest expenses remained relatively unchanged for the fourth quarter of 2023 compared to the same quarter of 2022.  Increases of $0.2 million in premises and equipment expenses and $0.2 million in fraud losses were partially offset by decreases of $0.2 million in professional services. 

The provision for income taxes decreased $2.1 million during the fourth quarter of 2023 primarily due to the lower level of operating income compared to the fourth quarter of 2022.  

Consolidated Balance Sheet & Asset Quality Overview

The Company’s total assets grew to $2.5 billion as of December 31, 2023, an increase of $125 million from December 31, 2022.  Growth in the loan portfolio of $121 million and $83 million in cash and cash equivalents was partially offset by a reduction of the investment portfolio by $75 million. The decline in the investment portfolio was primarily due to sales of $67 million in securities and $25 million in paydowns partially offset by a $16 million increase in market value of available-for-sale securities. Also noteworthy during 2023, the market value of held-to-maturity securities increased by $10 million, with $27 million in unrealized losses at December 31, 2023. During the same time period, total liabilities increased $98 million, or 4%.  Growth of $104 million in short-term borrowings replaced deposit declines of $8 million with the remaining balance used to fund loan growth with the excess increasing cash balances. Transactional deposit mix changed with overall balances down primarily from customers' investing part of their funds in higher yields and increased consumer spending. This reduction was partially mitigated through the $96 million growth achieved by promotional CD offerings during 2023. As of December 31, 2023, the ratio of insured and collateralized deposits to total deposits was approximately 77%.

Shareholders’ equity increased $26.5 million, or 16%, to $189.5 million at December 31, 2023 from $163.0 million at December 31, 2022. The increase was caused by a $14.7 million, after tax, improvement in accumulated other comprehensive income from lower net unrealized losses recorded on available-for-sale investment securities plus retained earnings increase from net income of $18.2 million, partially offset by $8.4 million in cash dividends paid to shareholders. An additional $3.3 million was recorded from the issuance of common stock under the Company’s stock plans and stock-based compensation expense. Partially offsetting these increases was a cumulative-effect adjustment made for adoption of ASU 2016-13 during the first quarter of 2023 which reduced retained earnings by $1.3 million. At December 31, 2023, there were no credit losses on available-for-sale and held-to-maturity debt securities.  Accumulated other comprehensive income (loss) is excluded from regulatory capital ratios. The Company remains well capitalized with Tier 1 capital at 9.15% of total average assets as of December 31, 2023.  Total risk-based capital was 14.67% of risk-weighted assets and Tier 1 risk-based capital was 13.42% of risk-weighted assets as of December 31, 2023.  Tangible book value per share was $29.57 at December 31, 2023 compared to $25.18 at December 31, 2022.  Tangible common equity was 6.79% of total assets at December 31, 2023 compared to 6.01% at December 31, 2022.

Asset Quality

Total non-performing assets were $3.3 million, or 0.13% of total assets, at December 31, 2023, compared to $2.7 million, or 0.12% of total assets, at December 31, 2022. Past due and non-accrual loans to total loans were 0.46% at December 31, 2023 compared to 0.28% at December 31, 2022. Net charge-offs to average total loans were 0.04% at December 31, 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 21 full-service offices throughout Lackawanna, Luzerne, Lehigh and Northampton Counties 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 a full suite of personal and commercial 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 5,980 hours of volunteer time and over $1.4 million in donations to non-profit organizations directly within the markets served throughout 2023. 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;
  • disruption of credit and equity markets;
  • 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 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; 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: December 31, 2023  December 31, 2022 
Assets        
Cash and cash equivalents $111,949  $29,091 
Investment securities  568,273   643,606 
Restricted investments in bank stock  3,905   5,268 
Loans and leases  1,686,555   1,565,811 
Allowance for credit losses on loans  (18,806)  (17,149)
Premises and equipment, net  34,232   31,307 
Life insurance cash surrender value  54,572   54,035 
Goodwill and core deposit intangible  20,812   21,168 
Other assets  41,667   45,235 
         
Total assets $2,503,159  $2,378,372 
         
Liabilities        
Non-interest-bearing deposits $536,143  $602,608 
Interest-bearing deposits  1,622,282   1,564,305 
Total deposits  2,158,425   2,166,913 
Short-term borrowings  117,000   12,940 
Secured borrowings  7,372   7,619 
Other liabilities  30,883   27,950 
Total liabilities  2,313,680   2,215,422 
         
Shareholders' equity  189,479   162,950 
         
Total liabilities and shareholders' equity $2,503,159  $2,378,372 


Average Year-To-Date Balances: December 31, 2023  December 31, 2022 
Assets        
Cash and cash equivalents $35,462  $81,532 
Investment securities  597,359   684,588 
Restricted investments in bank stock  4,212   3,565 
Loans and leases  1,635,286   1,500,796 
Allowance for credit losses on loans  (18,680)  (16,612)
Premises and equipment, net  32,215   30,640 
Life insurance cash surrender value  54,085   53,443 
Goodwill and core deposit intangible  20,977   21,359 
Other assets  44,180   40,265 
         
Total assets $2,405,096  $2,399,576 
         
Liabilities        
Non-interest-bearing deposits $558,962  $594,541 
Interest-bearing deposits  1,586,527   1,593,805 
Total deposits  2,145,489   2,188,346 
Short-term borrowings  49,860   1,031 
Secured borrowings  7,489   8,886 
Other liabilities  29,881   28,434 
Total liabilities  2,232,719   2,226,697 
         
Shareholders' equity  172,377   172,879 
         
Total liabilities and shareholders' equity $2,405,096  $2,399,576 


 
FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Statements of Income
(dollars in thousands)
 
  Three Months Ended  Twelve Months Ended 
  Dec. 31, 2023  Dec. 31, 2022  Dec. 31, 2023  Dec. 31, 2022 
Interest income                
Loans and leases $21,407  $17,425  $80,629  $64,020 
Securities and other  3,434   3,869   13,206   14,652 
                 
Total interest income  24,840   21,294   93,835   78,672 
                 
Interest expense                
Deposits  (9,232)  (2,822)  (28,945)  (6,144)
Borrowings and debt  (707)  (145)  (2,843)  (254)
                 
Total interest expense  (9,939)  (2,967)  (31,788)  (6,398)
                 
Net interest income  14,901   18,327   62,047   72,274 
                 
Provision for credit losses on loans  (111)  (525)  (1,491)  (2,100)
Net benefit (provision) for credit losses on unfunded loan commitments  65   (11)  165   13 
Non-interest income (loss)  (1,944)  3,920   11,405   16,642 
Non-interest expense  (12,804)  (12,854)  (51,870)  (51,361)
                 
Income before income taxes  107   8,857   20,256   35,468 
                 
(Provision) benefit for income taxes  361   (1,711)  (2,046)  (5,447)
Net income $468  $7,146  $18,210  $30,021 


  Three Months Ended 
  Dec. 31, 2023  Sep. 30, 2023  Jun. 30, 2023  Mar. 31, 2023  Dec. 31, 2022 
Interest income                    
Loans and leases $21,407  $20,502  $19,703  $19,018  $17,425 
Securities and other  3,434   3,176   3,276   3,320   3,869 
                     
Total interest income  24,840   23,678   22,979   22,338   21,294 
                     
Interest expense                    
Deposits  (9,232)  (8,488)  (6,607)  (4,618)  (2,822)
Borrowings and debt  (707)  (551)  (890)  (695)  (145)
                     
Total interest expense  (9,939)  (9,039)  (7,497)  (5,313)  (2,967)
                     
Net interest income  14,901   14,639   15,482   17,025   18,327 
                     
Provision for credit losses on loans  (111)  (525)  (675)  (180)  (525)
Net benefit (provision) for credit losses on unfunded loan commitments  65   275   50   (225)  (11)
Non-interest income (loss)  (1,944)  4,325   4,535   4,489   3,920 
Non-interest expense  (12,804)  (12,784)  (13,425)  (12,857)  (12,854)
                     
Income before income taxes  107   5,930   5,967   8,252   8,857 
                     
(Provision) benefit for income taxes  361   (590)  (605)  (1,212)  (1,711)
Net income $468  $5,340  $5,362  $7,040  $7,146 


 
FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Balance Sheets
(dollars in thousands)
 
At Period End: Dec. 31, 2023  Sep. 30, 2023  Jun. 30, 2023  Mar. 31, 2023  Dec. 31, 2022 
Assets                    
Cash and cash equivalents $111,949  $110,471  $69,632  $63,038  $29,091 
Investment securities  568,273   576,688   604,264   614,526   643,606 
Restricted investments in bank stock  3,905   3,800   3,728   5,968   5,268 
Loans and leases  1,686,555   1,647,552   1,631,472   1,627,155   1,565,811 
Allowance for credit losses on loans  (18,806)  (18,757)  (18,350)  (17,910)  (17,149)
Premises and equipment, net  34,232   32,625   31,329   31,408   31,307 
Life insurance cash surrender value  54,572   54,226   53,892   53,567   54,035 
Goodwill and core deposit intangible  20,812   20,897   20,981   21,071   21,168 
Other assets  41,667   49,318   44,284   44,198   45,235 
                     
Total assets $2,503,159  $2,476,820  $2,441,232  $2,443,021  $2,378,372 
                     
Liabilities                    
Non-interest-bearing deposits $536,143  $549,741  $582,473  $591,055  $602,608 
Interest-bearing deposits  1,622,282   1,602,018   1,569,519   1,552,036   1,564,305 
Total deposits  2,158,425   2,151,759   2,151,992   2,143,091   2,166,913 
Short-term borrowings  117,000   124,000   76,111   88,989   12,940 
Secured borrowings  7,372   7,439   7,498   7,560   7,619 
Other liabilities  30,883   28,190   27,887   27,494   27,950 
Total liabilities  2,313,680   2,311,388   2,263,488   2,267,134   2,215,422 
                     
Shareholders' equity  189,479   165,432   177,744   175,887   162,950 
                     
Total liabilities and shareholders' equity $2,503,159  $2,476,820  $2,441,232  $2,443,021  $2,378,372 


Average Quarterly Balances: Dec. 31, 2023  Sep. 30, 2023  Jun. 30, 2023  Mar. 31, 2023  Dec. 31, 2022 
Assets                    
Cash and cash equivalents $42,176  $33,238  $37,125  $29,192  $73,023 
Investment securities  558,423   598,604   610,009   623,097   637,825 
Restricted investments in bank stock  3,854   3,763   3,834   5,418   3,840 
Loans and leases  1,664,905   1,640,411   1,625,509   1,609,655   1,540,999 
Allowance for credit losses on loans  (19,222)  (18,812)  (18,296)  (18,380)  (17,113)
Premises and equipment, net  33,629   31,746   31,989   31,477   31,190 
Life insurance cash surrender value  54,449   54,110   53,782   53,995   53,925 
Goodwill and core deposit intangible  20,844   20,930   21,018   21,120   21,210 
Other assets  46,028   44,346   42,630   43,690   47,715 
                     
Total assets $2,405,086  $2,408,336  $2,407,600  $2,399,264  $2,392,614 
                     
Liabilities                    
Non-interest-bearing deposits $533,663  $548,682  $568,202  $585,987  $609,262 
Interest-bearing deposits  1,616,826   1,607,793   1,561,412   1,559,212   1,589,129 
Total deposits  2,150,489   2,156,475   2,129,614   2,145,199   2,198,391 
Short-term borrowings  48,490   37,595   64,558   48,937   3,875 
Secured borrowings  7,412   7,470   7,529   7,548   7,654 
Other liabilities  30,745   29,638   29,479   29,651   30,489 
Total liabilities  2,237,136   2,231,178   2,231,180   2,231,335   2,240,409 
                     
Shareholders' equity  167,950   177,158   176,420   167,929   152,205 
                     
Total liabilities and shareholders' equity $2,405,086  $2,408,336  $2,407,600  $2,399,264  $2,392,614 


 
FIDELITY D & D BANCORP, INC.
Selected Financial Ratios and Other Financial Data
 
  Three Months Ended 
  Dec. 31, 2023  Sep. 30, 2023  Jun. 30, 2023  Mar. 31, 2023  Dec. 31, 2022 
Selected returns and financial ratios                    
Basic earnings per share $0.08  $0.94  $0.95  $1.25  $1.27 
Diluted earnings per share $0.08  $0.93  $0.94  $1.24  $1.26 
Dividends per share $0.38  $0.36  $0.36  $0.36  $0.36 
Yield on interest-earning assets (FTE)*  4.36%  4.18%  4.12%  4.06%  3.78%
Cost of interest-bearing liabilities  2.36%  2.17%  1.84%  1.33%  0.74%
Cost of funds  1.79%  1.63%  1.37%  0.98%  0.53%
Net interest spread (FTE)*  2.00%  2.01%  2.28%  2.73%  3.04%
Net interest margin (FTE)*  2.66%  2.63%  2.82%  3.13%  3.27%
Return on average assets  0.08%  0.88%  0.89%  1.19%  1.18%
Pre-provision net revenue to average assets*  0.03%  1.02%  1.10%  1.46%  1.56%
Return on average equity  1.10%  11.96%  12.19%  17.00%  18.63%
Return on average tangible equity*  1.26%  13.56%  13.84%  19.45%  21.64%
Efficiency ratio (FTE)*  63.74%  65.01%  64.72%  57.72%  56.02%
Expense ratio  2.43%  1.39%  1.48%  1.41%  1.48%


  Years ended 
  Dec. 31, 2023  Dec. 31, 2022 
Basic earnings per share $3.21  $5.32 
Diluted earnings per share $3.19  $5.29 
Dividends per share $1.46  $1.35 
Yield on interest-earning assets (FTE)*  4.18%  3.56%
Cost of interest-bearing liabilities  1.93%  0.40%
Cost of funds  1.44%  0.29%
Net interest spread (FTE)*  2.25%  3.16%
Net interest margin (FTE)*  2.81%  3.28%
Return on average assets  0.76%  1.25%
Pre-provision net revenue to average assets*  0.90%  1.57%
Return on average equity  10.56%  17.37%
Return on average tangible equity*  12.03%  19.81%
Efficiency ratio (FTE)*  62.67%  56.02%
Expense ratio  1.69%  1.45%


 
FIDELITY D & D BANCORP, INC.
Selected Financial Ratios and Other Financial Data
 
Non-GAAP Measures Three Months Ended  Twelve Months Ended 
(dollars in thousands except per share data) Dec. 31, 2023  Dec. 31, 2022  Dec. 31, 2023  Dec. 31, 2022 
Net income $468  $7,146  $18,210  $30,021 
Loss (gain) on the sale of available-for-sale debt securities, net of income taxes  5,109   -   5,110   (3)
Adjusted net income* $5,577  $7,146  $23,320  $30,018 
Adjusted basic earnings per share* $0.98  $1.27  $4.11  $5.32 
Adjusted diluted earnings per share* $0.97  $1.26  $4.08  $5.29 
Adjusted return on average assets*  0.92%  1.18%  0.97%  1.25%
Adjusted return on average tangible equity*  15.04%  21.64%  15.40%  19.81%


Other financial data At period end: 
(dollars in thousands except per share data) Dec. 31, 2023  Sep. 30, 2023  Jun. 30, 2023  Mar. 31, 2023  Dec. 31, 2022 
Assets under management $876,287  $799,968  $840,068  $809,897  $736,401 
Book value per share $33.22  $29.04  $31.29  $31.05  $28.94 
Tangible book value per share* $29.57  $25.37  $27.59  $27.33  $25.18 
Equity to assets  7.57%  6.68%  7.28%  7.20%  6.85%
Tangible common equity ratio*  6.79%  5.89%  6.48%  6.39%  6.01%
Allowance for credit losses on loans to:                    
Total loans  1.12%  1.14%  1.13%  1.10%  1.10%
Non-accrual loans 5.68x  6.24x  5.25x  5.36x  6.77x 
Non-accrual loans to total loans  0.20%  0.18%  0.21%  0.21%  0.16%
Non-performing assets to total assets**  0.13%  0.14%  0.15%  0.14%  0.17%
Net charge-offs to average total loans  0.04%  0.04%  0.05%  0.04%  0.04%
                     
Capital Adequacy Ratios                    
Total risk-based capital ratio  14.67%  14.76%  14.71%  14.59%  14.35%
Common equity tier 1 risk-based capital ratio  13.42%  13.58%  13.52%  13.42%  13.27%
Tier 1 risk-based capital ratio  13.42%  13.58%  13.52%  13.42%  13.27%
Leverage ratio  9.15%  9.22%  9.08%  8.92%  8.69%

* 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) Dec. 31,
2023
  Sep. 30,
2023
  Jun. 30,
2023
  Mar. 31,
2023
  Dec. 31,
2022
 
FTE net interest income (non-GAAP)                    
Interest income (GAAP) $24,840  $23,678  $22,979  $22,338  $21,294 
Adjustment to FTE  664   700   725   760   700 
Interest income adjusted to FTE (non-GAAP)  25,504   24,378   23,704   23,098   21,994 
Interest expense (GAAP)  9,939   9,039   7,497   5,313   2,967 
Net interest income adjusted to FTE (non-GAAP) $15,565   15,339   16,207   17,785   19,027 
                     
Efficiency Ratio (non-GAAP)                    
Non-interest expenses (GAAP) $12,804  $12,784  $13,425  $12,857  $12,854 
                     
Net interest income (GAAP)  14,901   14,639   15,482   17,025   18,327 
Plus: taxable equivalent adjustment  664   700   725   760   700 
Non-interest income (GAAP)  (1,944)  4,325   4,535   4,489   3,920 
Less: (Loss) gain on sales of securities  (6,467)  -   -   (1)  - 
Net interest income (FTE) plus adjusted non-interest income (non-GAAP) $20,089  $19,664  $20,742  $22,275  $22,947 
Efficiency ratio (non-GAAP) (1)  63.74%  65.01%  64.72%  57.72%  56.02%
(1) The reported efficiency ratio is a non-GAAP measure calculated by dividing non-interest expense by the sum of net interest income, on an FTE basis, and adjusted non-interest (loss) income.                    
                     
Tangible Book Value per Share/Tangible Common Equity Ratio (non-GAAP)                    
Total assets (GAAP) $2,503,159  $2,476,820  $2,441,232  $2,443,021  $2,378,372 
Less: Intangible assets, primarily goodwill  (20,812)  (20,897)  (20,981)  (21,071)  (21,167)
Tangible assets  2,482,347   2,455,923   2,420,251   2,421,950   2,357,205 
Total shareholders' equity (GAAP)  189,479   165,432   177,744   175,887   162,950 
Less: Intangible assets, primarily goodwill  (20,812)  (20,897)  (20,981)  (21,071)  (21,167)
Tangible common equity  168,667   144,535   156,763   154,816   141,783 
                     
Common shares outstanding, end of period  5,703,636   5,696,351   5,681,260   5,665,255   5,630,794 
Tangible Common Book Value per Share $29.57  $25.37  $27.59  $27.33  $25.18 
Tangible Common Equity Ratio  6.79%  5.89%  6.48%  6.39%  6.01%
                     
Pre-Provision Net Revenue to Average Assets                    
Income before taxes (GAAP) $107  $5,930  $5,967  $8,252  $8,857 
Plus: Provision for credit losses  47   250   625   405   536 
Total pre-provision net revenue (non-GAAP)  154   6,180   6,592   8,657   9,393 
Total (annualized) (non-GAAP) $609  $24,517  $26,440  $35,110  $37,267 
                     
Average assets $2,405,086  $2,408,336  $2,407,600  $2,399,264  $2,392,614 
Pre-Provision Net Revenue to Average Assets (non-GAAP)  0.03%  1.02%  1.10%  1.46%  1.56%


 
FIDELITY D & D BANCORP, INC.
Reconciliations of Non-GAAP Financial Measures to GAAP
 
Reconciliations of Non-GAAP Measures to GAAP Years ended 
(dollars in thousands) Dec. 31, 2023  Dec. 31, 2022 
FTE net interest income (non-GAAP)        
Interest income (GAAP) $93,835  $78,672 
Adjustment to FTE  2,850   2,738 
Interest income adjusted to FTE (non-GAAP)  96,685   81,410 
Interest expense (GAAP)  31,788   6,398 
Net interest income adjusted to FTE (non-GAAP) $64,897   75,012 
         
Efficiency Ratio (non-GAAP)        
Non-interest expenses (GAAP) $51,870  $51,361 
         
Net interest income (GAAP)  62,047   72,274 
Plus: taxable equivalent adjustment  2,850   2,738 
Non-interest income (GAAP)  11,405   16,642 
Less: (Loss) gain on sales of securities  (6,468)  4 
Net interest income (FTE) plus non-interest income (non-GAAP) $82,770  $91,650 
Efficiency ratio (non-GAAP) (1)  62.67%  56.04%
(1) The reported efficiency ratio is a non-GAAP measure calculated by dividing non-interest expense by the sum of net interest income, on an FTE basis, and adjusted non-interest (loss) income.        
         
Pre-Provision Net Revenue to Average Assets        
Income before taxes (GAAP) $20,256  $35,468 
Plus: Provision for credit losses  1,327   2,087 
Total pre-provision net revenue (non-GAAP) $21,583  $37,555 
         
Average assets $2,405,096  $2,401,922 
Pre-Provision Net Revenue to Average Assets (non-GAAP)  0.90%  1.56%