FIDELITY D & D BANCORP INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 27, 2012

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Exhibit 99.1

FIDELITY D & D BANCORP, INC.

FOR IMMEDIATE RELEASE

 

Date: July 27, 2012

 

Contacts:

Daniel J. Santaniello Salvatore R. DeFrancesco, Jr.
President and Treasurer and
Chief Executive Officer Chief Financial Officer
570-504-8035 570-504-8000

 

FIDELITY D & D BANCORP, INC.

REPORTS SECOND QUARTER 2012 FINANCIAL RESULTS

 

Dunmore, PA – Fidelity D & D Bancorp, Inc. (OTC Bulletin Board: FDBC), parent company of The Fidelity Deposit and Discount Bank, announced net income for the quarter ended June 30, 2012 of $1.3 million, an increase of $28 thousand, or 2%, compared to the same 2011 quarter. Progress in improving earnings occurred from producing further other income that covered the lower net interest income and additional provision for loan losses, impairment charge and other expenses, over the previous year’s second quarter. Earnings per share on a diluted basis for the quarter were $0.57 and $0.59 for the three months ended June 30, 2012 and 2011, respectively.

 

“We are very pleased with the 2nd quarter results. The results reflected continued improvement in operating results in a very challenging global and regional economic climate,” stated Daniel J. Santaniello, President and Chief Executive Officer. “The improvement in operating results is reflective of our continued success of executing upon our strategic plan, which focuses on adding new, and cross selling existing relationships, by offering outstanding customer service. The increase in non-interest income continued to be very strong through the 2nd quarter of 2012 as loan rates remained low and the Bank continued to be the consumer’s preferred residential mortgage lender within northeastern Pennsylvania.”

 

Net income for the six months ended June 30, 2012 was $2.6 million, an increase of $58 thousand, or 2%, compared to net income of $2.5 million for the same 2011 period. The current year-to-date period earnings improvement occurred from producing more other income, which more than off-set the declining net interest income and higher loan losses, impairment charges and other expense, compared to the prior year-to-date period. Earnings per share were $1.13 and $1.15 for the six months ended June 30, 2012 and 2011, respectively.

 

The Company’s assets contracted $11.0 million, or 2%, to total $595.7 million at June 30, 2012 from $606.7 million at December 31, 2011. The decline resulted primarily from the $5 million long-term debt pay off, a $3.7 million decline in deposit balances, principally interest-bearing, the $1.4 million reduction in repurchase agreements, a short-term borrowing, and paying $3.8 million of obligations from utilizing excess cash balances during the first half of 2012.

 

Net interest income declined 3% to $5.2 million for the quarter ended June 30, 2012 from $5.3 million recorded during the same quarter of 2011. The cost reductions, from lowering rates on interest-bearing liabilities plus removing negative leverage spreads linked to the flattening short-term interest rate environment, were waning. The cost savings were no longer enough to keep pace with either asset repricing, to significantly lower short- to mid-term interest rates, or asset growth, primarily at mid-term yields, both of which had the effect of reducing yield on earning assets. As a result, net interest income decreased $164 thousand, or 3% in the second quarter of 2012 compared to the year ago period. This decline with the $13.1 million growth in earning asset volume sent net interest margin down 20 basis points to 3.81% for the second quarter of 2012, compared to 4.01% for same 2011 period.

 

 
 

 

“This type of pressure on margin would normally lead banks to seek higher yields by investing in long-term assets, stated Salvatore R. DeFrancesco, Jr., Treasurer and Chief Financial Officer. “We believe lower returns may be necessary over the near-term horizon, so we will be able to best serve our community as the economy turns positive.”

 

Net interest income decreased $284 thousand, or 3%, to $10.3 million for the six months ended June 30, 2012 from $10.6 million recorded during the same period of 2011. Net interest margin was 3.77% during the first half of 2012 compared to 4.03% during the first half of 2011, down 21 basis points from repricing activity and, more so, the $21.9 million increase in average earning assets.

 

The provision for loan losses was $600 thousand and $375 thousand for the second quarter ending June 30, 2012 and 2011, respectively. Provision for loan losses was $1.3 million for the six months ending June 30, 2012, as compared to $850 thousand for the same 2011 period. The allowance for loan losses was 1.91% of total loans at June 30, 2012, down from 2.00% at June 30, 2011.

 

Total other income recorded for the quarter ended June 30, 2012 was $1.9 million compared with $1.4 million for the same quarter in 2011. The increase in other income was primarily due to a surge in mortgage banking revenue from the $341 thousand added gains from the sale of loans and $144 thousand more service charges on loans for the quarter ended June 30, 2012, compared to the same 2011 period. Furthermore, fees from fiduciary trust services contributed $42 thousand more of other income.

 

Total other income for the six months ended June 30, 2012 was $4.0 million compared to $2.8 million for the same period in 2011. The revenue increase in the comparative periods resulted primarily from mortgage banking activity producing $490 thousand more gains from the sale of loans and $318 thousand added loan service charges, along with $245 thousand further gains from sale on investment securities, and $107 thousand added fees from fiduciary trust services for the six months ended June 30, 2012 compared to the same 2011 period.

 

Total other operating expenses were $4.7 million compared to $4.6 million for the quarters ending June 30, 2012 and 2011, respectively. The other operating expenses rose primarily from $98 thousand greater collection and ORE costs realized during the second quarter 2012.

 

Total other operating expenses increased $282 thousand, or 3%, to $9.4 million for the six months ending June 30, 2012 from $9.1 million in the same 2011 period. The other expense increase resulted primarily from the $236 thousand prepayment fee incurred on the early payoff of long-term debt in the 2012 year-to-date period.

 

Fidelity D & D Bancorp, Inc. serves Lackawanna and Luzerne Counties through The Fidelity Deposit and Discount Bank’s 11 community banking office locations. The Bank's deposits are insured by the Federal Deposit Insurance Corporation up to the full extent permitted by law.

 

For more information please visit our investor relations web site located through www.bankatfidelity.com.

 

 
 

 

Forward-Looking Statements

 

Certain of the matters discussed in this press release may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” and similar expressions are intended to identify such forward-looking statements.

 

The Company’s actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation:

 

·the effects of economic deterioration on current customers, specifically the effect of the economy on loan customers’ ability to repay loans;
·the costs and effects of litigation and of unexpected or adverse outcomes in such litigation;
·governmental monetary and fiscal policies, as well as legislative and regulatory changes;
·the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters;
·the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest rate protection agreements, as well as interest rate risks;
·the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in Mid Penn’s market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet;
·technological changes;
·acquisitions and integration of acquired businesses;
·the failure of assumptions underlying the establishment of reserves for loan and lease losses and estimations of values of collateral and various financial assets and liabilities;
·volatilities in the securities markets;
·deteriorating economic conditions
·acts of war or terrorism; and
·disruption of credit and equity markets.

 

 
 

 

FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Balance Sheets

(dollars in thousands)

 

At Period End:  June 30, 2012   December 31, 2011 
Assets          
Total cash and cash equivalents  $22,791   $52,165 
Investment securities   110,809    108,543 
Federal Home Loan Bank Stock   3,339    3,699 
Loans and leases   426,118    410,831 
Allowance for loan losses   (8,151)   (8,108)
Premises and equipment, net   13,686    13,575 
Life insurance cash surrender value   9,901    9,740 
Other assets   17,243    16,297 
           
Total assets  $595,736   $606,742 
           
Liabilities          
Non-interest-bearing deposits  $110,283   $96,155 
Interest-bearing deposits   401,787    419,647 
Total deposits   512,070    515,802 
Short-term borrowings   8,106    9,507 
Long-term debt   16,000    21,000 
Other liabilities   2,997    6,809 
Total liabilities   539,173    553,118 
           
Shareholders' equity   56,563    53,624 
           
Total liabilities and shareholders' equity  $595,736   $606,742 

 

Average Year-To-Date Balances:  June 30, 2012   December 31, 2011 
Assets          
Total cash and cash equivalents  $44,157   $50,325 
Investment securities   116,398    101,184 
Loans and leases, net   411,858    403,704 
Premises and equipment, net   13,685    14,188 
Other assets   26,242    26,926 
           
Total assets  $612,340   $596,327 
           
Liabilities          
Non-interest-bearing deposits  $108,480   $102,441 
Interest-bearing deposits   413,641    406,568 
Total deposits   522,121    509,009 
Short-term borrowings and long-term debt   31,536    33,630 
Other liabilities   3,310    3,290 
Total liabilities   556,967    545,929 
           
Shareholders' equity   55,373    50,398 
           
Total liabilities and shareholders' equity  $612,340   $596,327 

 

 
 

 

FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Statements of Income

(dollars in thousands)

 

   Three Months Ended   Six Months Ended       
   Jun. 30, 2012   Jun. 30, 2011   Jun. 30, 2012   Jun. 30, 2011       
Interest income                          
Loans and leases  $5,408   $5,893   $10,824   $11,828       
Securities and other   583    704    1,219    1,320       
                           
Total interest income   5,991    6,597    12,043    13,148       
                           
Interest expense                          
Deposits   617    1,015    1,301    2,057       
Borrowings and debt   221    265    475    540       
                           
Total interest expense   838    1,280    1,776    2,597       
                           
Net interest income   5,153    5,317    10,267    10,551       
                           
Provision for loan losses   600    375    1,300    850       
OTTI - credit losses   31    -    136    75       
Other income   1,903    1,398    3,959    2,811       
Other expenses   4,678    4,620    9,391    9,110       
Provision for income taxes   430    431    825    811       
Net income  $1,317   $1,289   $2,574   $2,516       

 

   Three Months Ended 
   Jun. 30, 2012   Mar. 31, 2012   Dec. 31, 2011   Sep. 30, 2011   Jun. 30, 2011 
Interest income                         
Loans and leases  $5,408   $5,415   $5,405   $5,673   $5,893 
Securities and other   583    637    674    703    704 
                          
Total interest income   5,991    6,052    6,079    6,376    6,597 
                          
Interest expense                         
Deposits   617    684    763    852    1,015 
Borrowings and debt   221    254    274    275    265 
                          
Total interest expense   838    938    1,037    1,127    1,280 
                          
Net interest income   5,153    5,114    5,042    5,249    5,317 
                          
Provision for loan losses   600    700    450    500    375 
OTTI - credit losses   31    105    165    6    - 
Other income   1,903    2,056    1,651    1,477    1,398 
Other expenses   4,678    4,713    4,491    4,444    4,620 
Provision for income taxes   430    395    385    449    431 
Net income  $1,317   $1,257   $1,202   $1,327   $1,289 
 
 

 

FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Balance Sheets

(dollars in thousands)

 

At Period End:  Jun. 30, 2012   Mar. 31, 2012   Dec. 31, 2011   Sep. 30, 2011   Jun. 30, 2011 
Assets                         
Total cash and cash equivalents  $22,791   $65,681   $52,165   $76,126   $46,676 
Investment securities   110,809    115,367    108,543    106,147    98,805 
Federal Home Loan Bank Stock   3,339    3,514    3,699    3,894    4,099 
Loans and leases   426,118    422,272    410,831    400,768    406,816 
Allowance for loan losses   (8,151)   (8,320)   (8,108)   (7,960)   (8,144)
Premises and equipment, net   13,686    13,942    13,575    13,846    14,166 
Life insurance cash surrender value   9,901    9,819    9,740    9,660    9,581 
Other assets   17,243    17,005    16,297    19,213    16,685 
                          
Total assets  $595,736   $639,280   $606,742   $621,694   $588,684 
                          
Liabilities                         
Non-interest-bearing deposits  $110,283   $129,041   $96,155   $100,668   $98,751 
Interest-bearing deposits   401,787    419,124    419,647    424,929    408,176 
Total deposits   512,070    548,165    515,802    525,597    506,927 
Short-term borrowings   8,106    17,238    9,507    18,005    8,007 
Long-term debt   16,000    16,000    21,000    21,000    21,000 
Other liabilities   2,997    2,900    6,809    5,010    2,404 
Total liabilities   539,173    584,303    553,118    569,612    538,338 
                          
Shareholders' equity   56,563    54,977    53,624    52,082    50,346 
                          
Total liabilities and shareholders' equity  $595,736   $639,280   $606,742   $621,694   $588,684 

 

Average Quarterly Balances:  Jun. 30, 2012   Mar. 31, 2012   Dec. 31, 2011   Sep. 30, 2011   Jun. 30, 2011 
Assets                         
Total cash and cash equivalents  $32,037   $56,277   $53,814   $64,037   $44,364 
Investment securities   118,721    114,076    112,554    103,624    98,646 
Loans and leases, net   416,755    406,962    402,093    393,771    408,047 
Premises and equipment, net   13,855    13,516    13,746    14,065    14,311 
Other assets   26,680    25,801    26,688    26,464    27,052 
                          
Total assets  $608,048   $616,632   $608,895   $601,961   $592,420 
                          
Liabilities                         
Non-interest-bearing deposits  $109,785   $107,175   $99,973   $99,025   $108,882 
Interest-bearing deposits   411,088    416,195    417,210    414,748    401,790 
Total deposits   520,873    523,370    517,183    513,773    510,672 
Short-term borrowings and long-term debt   27,954    35,117    35,114    33,707    29,180 
Other liabilities   3,266    3,355    3,658    3,192    3,048 
Total liabilities   552,093    561,842    555,955    550,672    542,900 
                          
Shareholders' equity   55,955    54,790    52,940    51,289    49,520 
                          
Total liabilities and shareholders' equity  $608,048   $616,632   $608,895   $601,961   $592,420 

 

 
 

 

FIDELITY D & D BANCORP, INC.

Selected Financial Ratios and Other Data

 

   Three Months Ended 
   Jun. 30, 2012   Mar. 31, 2012   Dec. 31, 2011   Sep. 30, 2011   Jun. 30, 2011 
Selected returns and financial ratios                         
Diluted earnings per share  $0.57   $0.56   $0.54   $0.59   $0.59 
Dividends per share  $0.25   $0.25   $0.25   $0.25   $0.25 
Yield on interest-earning assets (FTE)   4.41%   4.39%   4.39%   4.65%   4.94%
Cost of interest-bearing liabilities   0.77%   0.84%   0.91%   1.00%   1.19%
Net interest spread   3.64%   3.55%   3.48%   3.65%   3.75%
Net interest margin   3.81%   3.73%   3.67%   3.85%   4.01%
Return on average assets   0.87%   0.82%   0.78%   0.87%   0.87%
Return on average equity   9.47%   9.23%   9.01%   10.27%   10.44%
Efficiency ratio   64.54%   62.89%   65.35%   64.16%   67.08%
Expense ratio   1.84%   1.74%   1.88%   1.96%   2.19%

 

   Six Months Ended             
   Jun. 30, 2012   Jun. 30, 2011          
Diluted earnings per share  $1.13   $1.15                
Dividends per share  $0.50   $0.50                
Yield on interest-earning assets (FTE)   4.40%   4.98%            
Cost of interest-bearing liabilities   0.80%   1.22%               
Net interest spread   3.60%   3.76%               
Net interest margin   3.77%   4.03%               
Return on average assets   0.85%   0.86%               
Return on average equity   9.35%   10.43%               
Efficiency ratio   63.72%   66.27%               
Expense ratio   1.80%   2.17%               

 

Other data  Jun. 30, 2012   Mar. 31, 2012   Dec. 31, 2011   Sep. 30, 2011   Jun. 30, 2011 
Book value per share  $24.69   $24.18   $23.78   $23.26   $22.70 
Equity to assets   9.49%   8.60%   8.84%   8.38%   8.55%
Allowance for loan losses to:                         
Total loans   1.91%   1.97%   1.97%   1.99%   2.00%
Non-accrual loans   0.60x   0.65x   0.58x   1.00x   0.85x
Non-accrual loans to total loans   3.16%   3.04%   3.40%   1.99%   2.36%
Non-performing assets to total assets   3.70%   3.32%   3.58%   2.43%   2.37%

 

 

 

FIDELITY D & D BANCORP INC Reports