SOURCE: Fidelity D & D Bancorp Inc.

Fidelity D & D Bancorp Inc.

April 27, 2011 18:19 ET

Fidelity D & D Bancorp, Inc. Reports First Quarter 2011 Financial Results

DUNMORE, PA--(Marketwire - Apr 27, 2011) - Fidelity D & D Bancorp, Inc., (OTCBB: FDBC), parent company of The Fidelity Deposit and Discount Bank, announced net income for the quarter ended March 31, 2011 of $1,227,000, an increase of $671,000, or 121%, compared to $556,000 for the first quarter of 2010. Improvement in financial performance was seen from the combined management efforts across all divisions of the Bank: net interest income and other income increased $75,000 and $188,000, respectively; while, $100,000 less provision for loan loss was required and other operating expenses declined $615,000. Earnings per share on a fully diluted basis for the quarter totaled $0.56 compared to $0.26 for the prior year period.

"Fidelity delivered excellent financial performance across all divisions in the opening quarter of 2011," stated Daniel J. Santaniello, President and Chief Executive Officer. "With continued focus on building customer relationships and a strong customer acquisition strategy, Fidelity continued to produce strong core deposit growth along with an improved net interest margin. The company continues to be well positioned from a capital perspective, exceeding all regulatory requirements. Management's continued focus on enhancing asset quality produced improvements in all asset quality metrics."

Net interest income increased $75,000 to $5,234,000 for the quarter ended March 31, 2011 from $5,159,000 recorded during the first quarter of 2011. The increase in demand deposits and less outstanding debt along with the interest rate environment led to the cost savings on interest-bearing liabilities which more than offset the decline in yield on interest-earning assets, increasing net interest income earned for the first quarter of 2011. This also improved net interest margin to 4.05% for the first quarter of 2011, compared to 3.91% for same 2010 period.

A provision for loan loss of $475,000 was recorded during the first quarter of 2011 compared to $575,000 required for the same 2010 period. The provision for loan loss reinforced the allowance for loan losses for potential credit risks that may result from today's uncertain economic climate, while improvement in overall asset quality dictated the lower required level of provision for the current quarter. The allowance for loan losses was 1.96% of total loans at March 31, 2011, up from 1.79% at March 31, 2010.

Total other income recorded for the quarter ended March 31, 2011 was $1,413,000, compared to $1,225,000 for the same quarter in 2010. The increase was primarily from added gains from mortgage banking and the sale of an SBA guaranteed commercial loan during 2011. Mortgage servicing plus higher revenue from financial service and trust activities during 2011 contributed to the increased other income when compared to the first quarter of 2010.

The OTTI credit losses on pooled trust preferred securities were $75,000 and $79,000 in the quarters ended March 31, 2011 and 2010, respectively. The risk of future OTTI charges will be influenced by the performance of the collateral pools that support each pooled trust preferred security. Additional rating downgrades, deferring collateral and reduced default recovery rates, could cause further OTTI charges to be recognized through future earnings.

Total other operating expense was reduced by $615,000, or 12% from $5,105,000 to $4,490,000 for the quarters ended March 31, 2010 and 2011, respectively. The other expense decrease resulted primarily from $544,000 less salary and benefit costs incurred, including the $398,000 early retirement and severance costs realized in 2010, and the $113,000 reduction in collection and ORE expenses during the first quarter of 2011 as compared to 2010.

The Company's assets increased 6% to total $596,296,000 at March 31, 2011 compared to the $561,673,000 total assets at December 31, 2010. The Bank's regulatory capital ratios improved for the period ending March 31, 2011 with a Total Risk Based Capital Ratio of 12.0%, Tier I Capital Ratio of 10.8% and Leverage Ratio of 8.4%, all of which exceed the current "well capitalized" regulatory requirements.

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

Forward-Looking Statements

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

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

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

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

                       FIDELITY D & D BANCORP, INC.
              Unaudited Condensed Consolidated Balance Sheets


At Period End:                          March 31, 2011   December 31, 2010
                                      -----------------  -----------------
Assets
   Total cash and cash equivalents    $      47,443,267  $      22,967,345
   Investment securities                     90,881,865         83,431,371
   Federal Home Loan Bank Stock               4,314,900          4,542,000
   Loans and leases                         419,806,900        416,014,151
   Allowance for loan losses                 (8,223,978)        (7,897,822)
   Premises and equipment, net               14,421,943         14,763,873
   Life insurance cash surrender
    value                                     9,501,732          9,424,926
   Other assets                              18,149,883         18,427,308
                                      -----------------  -----------------

      Total assets                    $     596,296,512  $     561,673,152
                                      =================  =================

Liabilities
   Non-interest-bearing deposits      $     113,283,383  $      85,780,392
   Interest-bearing deposits                399,916,954        396,667,300
                                      -----------------  -----------------
       Total deposits                       513,200,337        482,447,692
   Short-term borrowings                     11,131,104          8,548,400
   Long-term debt                            21,000,000         21,000,000
   Other liabilities                          2,662,440          2,903,045
                                      -----------------  -----------------
      Total liabilities                     547,993,881        514,899,137

   Shareholders' equity                      48,302,631         46,774,015
                                      -----------------  -----------------

      Total liabilities and
       shareholders' equity           $     596,296,512  $     561,673,152
                                      =================  =================

Average Year-To-Date Balances:          March 31, 2011   December 31, 2010
                                      -----------------  -----------------
Assets
   Total cash and cash equivalents    $      38,769,905  $      42,181,685
   Investment securities                     89,632,732         84,050,381
   Loans and leases, net                    411,113,414        419,748,250
   Premises and equipment, net               14,638,667         14,975,020
   Other assets                              27,516,317         26,598,374
                                      -----------------  -----------------

      Total assets                    $     581,671,035  $     587,553,710
                                      =================  =================

Liabilities
   Non-interest-bearing deposits      $     101,941,654  $      76,707,139
   Interest-bearing deposits                392,160,656        405,518,509
                                      -----------------  -----------------
       Total deposits                       494,102,310        482,225,648
   Short-term borrowings and
    long-term debt                           36,534,997         53,823,711
   Other liabilities                          3,258,128          3,626,830
                                      -----------------  -----------------
      Total liabilities                     533,895,435        539,676,189

   Shareholders' equity                      47,775,600         47,877,521
                                      -----------------  -----------------

      Total liabilities and
       shareholders' equity           $     581,671,035  $     587,553,710
                                      =================  =================








                       FIDELITY D & D BANCORP, INC.
          Unaudited Condensed Consolidated Statements of Income


                                                    Three Months Ended
                                                ---------------------------
                                                Mar. 31, 2011 Mar. 31, 2010
                                                ------------- -------------
Interest income
    Loans and leases                            $   5,934,513 $   6,226,313
    Securities and other                              615,860       814,978
                                                ------------- -------------

       Total interest income                        6,550,373     7,041,291

 Interest expense
    Deposits                                        1,041,877     1,414,061
    Borrowings and debt                               274,877       468,296
                                                ------------- -------------

       Total interest expense                       1,316,754     1,882,357
                                                ------------- -------------

       Net interest income                          5,233,619     5,158,934

    Provision for loan losses                         475,000       575,000
    OTTI - credit losses                               74,692        79,050
    Other income                                    1,412,630     1,224,652
    Other expenses                                  4,489,828     5,104,449
    Provision for income taxes                        379,844        69,207
                                                ------------- -------------
       Net income                               $   1,226,886 $     555,880
                                                ============= =============









                                   Three Months Ended
               ------------------------------------------------------------
                Mar. 31,     Dec. 31,    Sep. 30,    Jun. 30,    Mar. 31,
                  2011         2010        2010        2010        2010
               ----------- -----------  ----------  ----------- -----------
Interest
 income
  Loans and
   leases      $ 5,934,513 $ 6,010,455  $6,213,939  $ 6,158,022 $ 6,226,313
  Securities
   and other       615,860     604,335     739,761      812,171     814,978
               ----------- -----------  ----------  ----------- -----------

    Total
     interest
     income      6,550,373   6,614,790   6,953,700    6,970,193   7,041,291

Interest
 expense
  Deposits       1,041,877   1,119,838   1,244,438    1,299,716   1,414,061
  Borrowings
   and debt        274,877     390,980     436,490      453,196     468,296
               ----------- -----------  ----------  ----------- -----------

    Total
     interest
     expense     1,316,754   1,510,818   1,680,928    1,752,912   1,882,357
               ----------- -----------  ----------  ----------- -----------

    Net
     interest
     income      5,233,619   5,103,972   5,272,772    5,217,281   5,158,934

  Provision
   for loan
   losses          475,000     835,000     375,000      300,000     575,000
  OTTI -
   credit
   losses           74,692   9,332,322   1,748,674      675,872      79,050
  Other
   income        1,412,630     695,159   1,478,263    1,316,231   1,224,652
  Other
   expenses      4,489,828     796,137   4,317,611    4,694,155   5,104,449
  Provision
   (credit)
   for income
   taxes           379,844  (2,724,896)    (45,193)     144,513      69,207
               ----------- -----------  ----------  ----------- -----------
    Net income
     (loss)    $ 1,226,885 $(2,439,432) $  354,943  $   718,972 $   555,880
               =========== ===========  ==========  =========== ===========









                       FIDELITY D & D BANCORP, INC.
              Unaudited Condensed Consolidated Balance Sheets


At Period End:                 Mar. 31, 2011  Dec. 31, 2010  Sep. 30, 2010
                               -------------  -------------  -------------
Assets
   Total cash and cash
    equivalents                $  47,443,267  $  22,967,345  $  47,571,175
   Investment securities          90,881,865     83,431,371     87,255,681
   Federal Home Loan Bank
    Stock                          4,314,900      4,542,000      4,781,100
   Loans and leases              419,806,900    416,014,151    422,688,600
   Allowance for loan losses      (8,223,978)    (7,897,822)    (7,484,253)
   Premises and equipment, net    14,421,943     14,763,873     14,649,763
   Life insurance cash
    surrender value                9,501,732      9,424,926      9,347,707
   Other assets                   18,149,883     18,427,308     17,788,825
                               -------------  -------------  -------------

      Total assets             $ 596,296,512  $ 561,673,152  $ 596,598,598
                               =============  =============  =============

Liabilities
   Non-interest-bearing
    deposits                   $ 113,283,383  $  85,780,392  $  81,819,441
   Interest-bearing deposits     399,916,954    396,667,300    409,063,486
                               -------------  -------------  -------------
       Total deposits            513,200,337    482,447,692    490,882,927
   Short-term borrowings          11,131,104      8,548,400     21,804,259
   Long-term debt                 21,000,000     21,000,000     32,000,000
   Other liabilities               2,662,440      2,903,045      3,235,939
                               -------------  -------------  -------------
      Total liabilities          547,993,881    514,899,137    547,923,125

   Shareholders' equity           48,302,631     46,774,015     48,675,473
                               -------------  -------------  -------------

      Total liabilities and
       shareholders' equity    $ 596,296,512  $ 561,673,152  $ 596,598,598
                               =============  =============  =============


Average Quarterly Balances:    Mar. 31, 2011  Dec. 31, 2010  Sep. 30, 2010
                               -------------  -------------  -------------
Assets
   Total cash and cash
    equivalents                $  38,769,905  $  53,297,299  $  44,858,721
   Investment securities          89,632,732     86,120,978     83,361,340
   Loans and leases, net         411,113,414    409,008,829    416,462,967
   Premises and equipment, net    14,638,667     14,648,400     14,854,405
   Other assets                   27,516,317     27,381,576     26,404,370
                               -------------  -------------  -------------

      Total assets             $ 581,671,035  $ 590,457,082  $ 585,941,803
                               =============  =============  =============

Liabilities
   Non-interest-bearing
    deposits                   $ 101,941,654  $  82,019,125  $  75,830,989
   Interest-bearing deposits     392,160,656    404,692,893    406,630,065
                               -------------  -------------  -------------
       Total deposits            494,102,310    486,712,018    482,461,054
   Short-term borrowings and
    long-term debt                36,534,997     51,089,956     50,958,606
   Other liabilities               3,258,128      3,995,850      3,509,030
                               -------------  -------------  -------------
      Total liabilities          533,895,435    541,797,824    536,928,690

   Shareholders' equity           47,775,600     48,659,258     49,013,113
                               -------------  -------------  -------------

      Total liabilities and
       shareholders' equity    $ 581,671,035  $ 590,457,082  $ 585,941,803
                               =============  =============  =============



At Period End:                 Jun. 30, 2010  Mar. 31, 2010
                               -------------  -------------
Assets
   Total cash and cash
    equivalents                $  36,728,875  $  40,182,654
   Investment securities          75,948,064     81,433,603
   Federal Home Loan Bank
    Stock                          4,781,100      4,781,100
   Loans and leases              428,122,754    434,257,867
   Allowance for loan losses      (7,523,250)    (7,751,589)
   Premises and equipment, net    14,936,387     15,245,122
   Life insurance cash
    surrender value                9,269,973      9,192,627
   Other assets                   17,006,380     17,947,191
                               -------------  -------------

      Total assets             $ 579,270,283  $ 595,288,575
                               =============  =============

Liabilities
   Non-interest-bearing
    deposits                   $  77,836,050  $  73,065,849
   Interest-bearing deposits     403,090,854    413,491,335
                               -------------  -------------
       Total deposits            480,926,904    486,557,184
   Short-term borrowings          15,577,694     26,370,222
   Long-term debt                 32,000,000     32,000,000
   Other liabilities               2,922,545      3,995,312
                               -------------  -------------
      Total liabilities          531,427,143    548,922,718

   Shareholders' equity           47,843,140     46,365,857
                               -------------  -------------

      Total liabilities and
       shareholders' equity    $ 579,270,283  $ 595,288,575
                               =============  =============


Average Quarterly Balances:    Jun. 30, 2010  Mar. 31, 2010
                               -------------  -------------
Assets
   Total cash and cash
    equivalents                $  33,008,130  $  37,358,017
   Investment securities          86,919,361     79,737,266
   Loans and leases, net         424,331,436    429,450,503
   Premises and equipment, net    15,116,975     15,288,661
   Other assets                   26,073,072     26,527,219
                               -------------  -------------

      Total assets             $ 585,448,974  $ 588,361,666
                               =============  =============

Liabilities
   Non-interest-bearing
    deposits                   $  74,100,555  $  74,808,276
   Interest-bearing deposits     407,132,578    403,594,213
                               -------------  -------------
       Total deposits            481,233,133    478,402,489
   Short-term borrowings and
    long-term debt                53,323,203     60,053,061
   Other liabilities               3,618,319      3,379,727
                               -------------  -------------
      Total liabilities          538,174,655    541,835,277

   Shareholders' equity           47,274,319     46,526,389
                               -------------  -------------

      Total liabilities and
       shareholders' equity    $ 585,448,974  $ 588,361,666
                               =============  =============










                       FIDELITY D & D BANCORP, INC.
                 Selected Financial Ratios and Other Data


                                         Three Months Ended
                          ------------------------------------------------
                          Mar. 31,  Dec. 31,  Sep. 30,  Jun. 30,  Mar. 31,
                            2011      2010      2010      2010      2010
                          --------  --------  --------  --------  --------
Selected returns and
 financial ratios
   Diluted earnings
    (loss) per share      $   0.56  $  (2.26) $   0.16  $   0.34  $   0.26
   Dividends per share    $   0.25  $   0.25  $   0.25  $   0.25  $   0.25
   Yield on
    interest-earning
    assets (FTE)              5.03%     4.87%     5.14%     5.19%     5.28%
   Cost of
    interest-bearing
    liabilities               1.25%     1.32%     1.46%     1.53%     1.65%
   Net interest spread        3.78%     3.55%     3.68%     3.66%     3.63%
   Net interest margin        4.05%     3.79%     3.93%     3.92%     3.91%
   Return on average
    assets                    0.86%    -3.25%     0.24%     0.49%     0.38%
   Return on average
    equity                   10.41%   -39.42%     2.87%     6.10%     4.85%
   Efficiency ratio          65.51%    58.61%    62.10%    69.66%    71.57%
   Expense ratio              2.15%     1.68%     1.92%     2.32%     2.40%

Other data
                          --------  --------  --------  --------  --------
                          Mar. 31,  Dec. 31,  Sep. 30,  Jun. 30,  Mar. 31,
                            2011      2010      2010      2010      2010
                          --------  --------  --------  --------  --------
   Book value per share   $  21.96  $  21.48  $  22.50  $  22.27  $  21.74
   Equity to assets           8.10%     8.33%     8.16%     8.26%     7.79%
   Allowance for loan
    losses to:
      Total loans             1.96%     1.90%     1.77%     1.76%     1.79%
      Non-accrual loans       0.87x     0.79x     0.78x     0.84x     0.70x
   Non-accrual loans to
    total loans               2.25%     2.40%     2.27%     2.08%     2.56%
   Non-performing assets
    to total assets           2.37%     2.38%     2.22%     2.21%     2.28%

Contact Information

  • Contacts:
    Daniel J. Santaniello
    President and Chief Executive Officer
    570-504-8035

    Salvatore R. DeFrancesco, Jr.
    Treasurer and Chief Executive Officer
    570-504-8000