FDBC
$64.72
Fidelity D & D Bancorp
($.59)
(.90%)
Earnings Details
Quarter September 2019
Wednesday, October 23, 2019 6:30:00 AM
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Summary

Fidelity D & D Bancorp (FDBC) Recent Earnings

Fidelity D & D Bancorp (FDBC) reported Quarter September 2019 earnings of $0.80 per share on revenue of $12.6 million.. Revenue grew 11.7% on a year-over-year basis.

Results
Reported Earnings
$0.80
Earnings Whisper
-
Consensus Estimate
Reported Revenue
$12.6 Mil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Fidelity D & D Bancorp, Inc. Reports Third Quarter 2019 Financial Results

DUNMORE, Pa., Oct. 23, 2019 (GLOBE NEWSWIRE) -- Fidelity D & D Bancorp, Inc. (NASDAQ: FDBC) and its banking subsidiary Fidelity Deposit and Discount Bank, announced net income for the quarter ended September 30, 2019 of $3.1 million, or $0.80 diluted earnings per share, compared to $2.9 million, or $0.75 diluted earnings per share, for the quarter ended September 30, 2018.  The $0.2 million, or 7%, growth in net income resulted primarily from $0.3 million higher net interest income combined with a $0.3 million increase in non-interest income and $0.1 million lower provision for loan losses, partially offset by a $0.5 million increase in operating expenses.  The Company experienced a $50.1 million, or 6%, increase in average interest-earning assets funded by a $70.8 million increase in average deposits and a $13.3 million increase in average shareholders’ equity partially offset by $24.8 million less in average borrowings for the third quarter of 2019 compared to the same 2018 period.  Return on average assets (ROA) and return on average equity (ROE) were 1.22% and 11.77%, respectively, for the third quarter of 2019 and 1.22% and 12.65%, respectively, for the third quarter of 2018.

“We are very pleased that third quarter and 2019 year-to-date financial results posted record net income,” stated Daniel J. Santaniello, President and Chief Executive Officer.  “Additionally, for the first time in the Company’s history, total assets exceeded $1 billion.  The continued asset growth and record earnings reflect the Fidelity Bankers’ commitment to building relationships and partnering with our clients to achieve financial success.  We continue to increase deposits, loans, and non-interest income, while effectively managing expenses.”

Net income increased $0.7 million, or 9%, for the nine months ended September 30, 2019 to $8.9 million from $8.2 million for the same 2018 period.  The year-to-date increase was primarily driven by 6% higher total revenue from a $1.2 million increase in net interest income and $0.6 million more non-interest income.  The 5% increase in net interest income was the result of $62.7 million growth in average interest-earning assets.  This total revenue growth combined with a $0.3 million lower provision for loan losses more than offset $1.3 million in additional non-interest expenses.  Earnings per share on a diluted basis were $2.32 and $2.15 for the nine months ended September 30, 2019 and 2018, respectively.

Consolidated Third Quarter Operating Results Overview

Net interest income was $8.0 million for the third quarter of 2019, a $0.3 million, or 4%, increase over the $7.7 million earned for the third quarter of 2018.  The net interest income growth resulted from a $50.1 million larger average balance of interest-earning assets that generated a 20 basis point higher fully-taxable equivalent (FTE) yield which increased interest income by $1.0 million.  The loan portfolio had the biggest impact, producing a $0.7 million increase in interest income from a $30.7 million higher average balance and a 20 basis point higher yield with all portfolios contributing to the increase.  The investment portfolio benefited from the Company investing $19.5 million more, on average, in mortgage backed securities and municipal securities which caused interest income on investments to increase $0.1 million.  Partially offsetting this interest income growth, interest expense increased $0.7 million.  The average balance of interest-bearing deposits increased $76.2 million and the rates paid on these deposits increased 36 basis points resulting in $0.7 million in additional interest expense.  The cost of interest-bearing liabilities was 1.17% for the third quarter of 2019, an increase of 34 basis points over the 0.83% paid for the third quarter of 2018.  The Company’s FTE net interest spread was 3.18% for the third quarter of 2019, or 14 basis points lower than the 3.32% recorded for the same 2018 quarter.  The decrease was due to the rates paid on interest-bearing liabilities increasing faster than the yields earned on interest-earning assets.  The cost of funds increased 28 basis points despite a 34 basis point higher rate paid on interest-bearing liabilities.  The Company’s FTE net interest margin decreased by seven basis points to 3.49% for the three months ended September 30, 2019 from 3.56% for the same 2018 period.

The provision for loan losses was $320 thousand for the third quarter of 2019, a $80 thousand decrease compared to $400 thousand for the third quarter of 2018.  The decrease in the provision for loan losses from the third quarter of 2018 was due primarily to a deceleration in the Company’s loan growth along with improved asset quality when compared to the third quarter of 2019.

Total other income increased $0.3 million to $2.6 million for the third quarter of 2019 compared to $2.3 million for the third quarter of 2018.  The increase in other income was primarily due to $0.2 million higher service charges on loans and a $0.1 million increase in financial service fees during the third quarter of 2019 compared to the same 2018 period. 

Other expenses increased $0.5 million, or 8%, for the third quarter of 2019 to $6.6 million from $6.1 million for the same 2018 quarter.  Most of the increase was due to $0.2 million in added salaries and employee benefits, $0.1 million more data processing and communication expense, $0.1 million in additional premises and equipment expense due to a new branch which opened in December of 2018 and $0.1 million in additional professional service expenses.

Consolidated Year-To-Date Operating Results Overview

Net interest income was $23.7 million for the nine months ended September 30, 2019 compared to $22.5 million for the nine months ended September 30, 2018.  The $1.2 million, or 5%, improvement was the result of earnings from a larger average balance of higher-yielding interest-earning assets which more than offset the increased interest expense from higher rates paid on more interest-bearing liabilities.  The loan portfolio caused the largest impact, producing $2.9 million more in interest income, of which $1.6 million was the result of higher average loan balances and $1.3 million stemmed from higher yields earned on loans.  The investment portfolio contributed $0.5 million in additional earnings, primarily from a higher yield on a larger mortgage-backed securities portfolio.  On the liability side, interest expense increased by $2.4 million primarily due to higher rates paid on $48.7 million more interest-bearing deposits.  A larger average balance of borrowings at higher rates also contributed $0.6 million in additional interest expense.  FTE net interest spread was 3.25% for the first nine months of 2019, or 17 basis points lower than the 3.42% recorded for the first nine months of 2018.  The rates paid on interest-bearing liabilities rose faster than the yields earned on interest-earning assets, which reduced the spread.  Over the same time period, the Company’s FTE net interest margin decreased by six basis points to 3.55% from 3.61%.

For the nine months ended September 30, 2019, the provision for loan losses was $0.8 million compared to $1.1 million for the same 2018 period.  The $0.3 million reduction in the provision was due to deceleration in the Company’s loan growth during 2019 along with improved asset quality when compared to the same 2018 period.

Total other income for the nine months ended September 30, 2019 was $7.5 million, an increase of $0.6 million, or 9%, from $6.9 million for the nine months ended September 30, 2018.  The increase in other income was comprised of the following: $0.4 million in loan service charges, $0.1 million in interchange fees and $0.2 million in financial service fees.

Other expenses increased to $19.8 million, for the nine months ended September 30, 2019, an increase of $1.3 million, or 7%, from $18.5 million for the nine months ended September 30, 2018.  The largest driver of this increase was a $0.7 million increase in salaries and employee benefits expense.  In addition, there was $0.3 million in additional premises and equipment expenses, a $0.3 million increase in data processing expense and $0.1 million more loan collection expenses.  These increases were partially offset by $0.3 million lower professional service expenses.

Consolidated Balance Sheet & Asset Quality Overview

During the third quarter of 2019, the Company’s total assets grew to over $1 billion for the first time.  The Company’s total assets increased $30.3 million, or 3%, to $1,011.4 million at September 30, 2019 from $981.1 million at December 31, 2018.  This asset growth resulted primarily from a $16.7 million increase in the loan portfolio and $6.4 million increase in the investment portfolio.  Deposit growth of $82.1 million was used to pay down $68.7 million in borrowings and fund loan growth.  The Company will focus on increasing assets using its relationship management strategy to grow loans and deposits and achieve profitable returns.  The Company has begun its Luzerne County expansion plans, opening the Back Mountain branch in December 2018 and the Mountain Top branch in October 2019.

Total non-performing assets were $5.5 million, or 0.55% of total assets, at September 30, 2019.  Non-performing assets decreased $0.8 million from December 31, 2018, as a $0.9 million decrease in troubled debt restructured loans and a $0.4 million decrease in non-performing loans was partially offset by a $0.5 million increase in other real estate owned.  Net charge-offs to average total loans increased to 0.21% at September 30, 2019 compared to 0.13% at December 31, 2018.

During the first nine months of 2019, the Company purchased an additional $2.0 million of bank-owned life insurance for tax-free income to mitigate added employee benefit costs.  On January 1, 2019, the Company recognized right-of-use assets and lease liabilities for leases classified as operating leases as it transitioned to ASU 2016-02, Leases (Topic 842).  At September 30, 2019, the right-of-use assets and operating lease liabilities amounted to $5.5 million and $6.1 million, respectively.

Shareholders’ equity increased $11.2 million, or 12%, to $104.8 million at September 30, 2019 from $93.6 million at December 31, 2018.  Net income of $8.9 million was supplemented by a $4.5 million, after tax, improvement in net unrealized gains from the investment portfolio.  An additional $0.9 million recorded from the issuance of common stock under the Company’s stock plans and stock-based compensation, was offset by $3.0 million in cash dividends paid to shareholders.  The Company remains well capitalized and is positioned for continued growth with total shareholders’ equity at 10.36% of total assets at September 30, 2019.  Book value per share was $27.71 at September 30, 2019 compared to $24.89 at December 31, 2018.

Fidelity D & D Bancorp, Inc. has built a strong history as trusted financial advisors to the clients served by The Fidelity Deposit and Discount Bank and is proud to be an active member of the community of Northeastern Pennsylvania.  Part of the Bank’s mission is to be a good corporate partner within its market areas by providing over 1,600 hours of volunteer time to non-profit organizations yearly.  The Company serves multiple office locations throughout Lackawanna and Luzerne Counties providing personal and business banking products and services, including wealth management planning through fiduciary activities with the Bank’s full trust powers; as well as offering a full array of asset management services.  The Bank provides 24 hour, 7 day a week service to customers through branch offices, online at www.bankatfidelity.com, and through the Customer Care Center at 800-388-4380.  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 constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.  The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” and similar expressions are intended to identify such forward-looking statements.

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

  • the effects of economic conditions on current customers, specifically the effect of the economy on loan customers’ ability to repay loans;
  • the costs and effects of litigation and of unexpected or adverse outcomes in such litigation;
  • the impact of new or changes in existing laws and regulations, including the Tax Cuts and Jobs Act and Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the regulations promulgated there under;
  • 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 effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters;
  • the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest rate protection agreements, as well as interest rate risks;
  • the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the internet;
  • technological changes;
  • the interruption or breach in security of our information systems and other technological risks and attacks resulting in failures or disruptions in customer account management, general ledger processing and loan or deposit updates and potential impacts resulting therefrom including additional costs, reputational damage, regulatory penalties, and financial losses;
  • acquisitions and integration of acquired businesses;
  • the failure of assumptions underlying the establishment of reserves for loan losses and estimations of values of collateral and various financial assets and liabilities;
  • volatilities in the securities markets;
  • acts of war or terrorism;
  • disruption of credit and equity markets; and
  • the risk that our analyses of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful.

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:September 30, 2019
 December 31, 2018 
Assets    
Cash and cash equivalents$ 18,687 $ 17,485 
Investment securities  189,246   182,810 
Federal Home Loan Bank stock  3,818   6,339 
Loans and leases  750,470   733,771 
Allowance for loan losses  (9,441)  (9,747)
Premises and equipment, net  18,149   18,289 
Life insurance cash surrender value  23,094   20,615 
Other assets  17,401   11,540 
     
Total assets$ 1,011,424 $ 981,102 
     
Liabilities    
Non-interest-bearing deposits$ 203,816 $ 194,731 
Interest-bearing deposits  648,506   575,452 
Total deposits  852,322   770,183 
Short-term borrowings  24,355   76,366 
FHLB advances  15,000   31,704 
Other liabilities  14,958   9,292 
Total liabilities  906,635   887,545 
     
Shareholders' equity  104,789   93,557 
     
Total liabilities and shareholders' equity$ 1,011,424 $ 981,102 
     
     
Average Year-To-Date Balances:September 30, 2019
 December 31, 2018 
Assets    
Cash and cash equivalents$ 15,470 $ 18,639 
Investment securities  189,319   172,085 
Loans and leases, net  714,243   678,217 
Premises and equipment, net  18,311   16,389 
Other assets  38,259   32,612 
     
Total assets$ 975,602 $ 917,942 
     
Liabilities    
Non-interest-bearing deposits$ 195,757 $ 196,790 
Interest-bearing deposits  610,636   564,763 
Total deposits  806,393   761,553 
Short-term borrowings  37,968   37,558 
FHLB advances  19,109   22,109 
Other liabilities  13,094   7,697 
Total liabilities  876,564   828,917 
     
Shareholders' equity  99,038   89,025 
     
Total liabilities and shareholders' equity$ 975,602 $ 917,942 


FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Statements of Income
(dollars in thousands)

           
  Three Months Ended Nine Months Ended  
  Sep. 30, 2019 Sep. 30, 2018 Sep. 30, 2019 Sep. 30, 2018  
Interest income          
Loans and leases$ 8,499  $ 7,779 $ 24,850 $ 21,940   
Securities and other  1,509   1,249   4,470   3,766   
           
Total interest income  10,008   9,028   29,320   25,706   
           
Interest expense          
Deposits  1,683   981   4,489   2,671   
Borrowings and debt  325   336   1,127   542   
           
Total interest expense  2,008   1,317   5,616   3,213   
           
Net interest income  8,000   7,711   23,704   22,493   
           
Provision for loan losses  (320)  (400)  (830)  (1,125)  
Other income  2,632   2,283   7,578   6,937   
Other expenses  (6,643)  (6,172)  (19,848)  (18,542)  
           
Income before income taxes  3,669   3,422   10,604   9,763   
           
Provision for income taxes  (611)  (559)  (1,742)  (1,604)  
Net income$ 3,058  $ 2,863 $ 8,862 $ 8,159   
           
           
           
 Three Months Ended
  Sep. 30, 2019 Jun. 30, 2019 Mar. 31, 2019 Dec. 31, 2018 Sep. 30, 2018
Interest income          
Loans and leases$ 8,499 $ 8,193 $ 8,158 $ 8,173 $ 7,779 
Securities and other  1,509   1,464   1,497   1,451   1,249 
           
Total interest income  10,008   9,657   9,655   9,624   9,028 
           
Interest expense          
Deposits  1,683   1,474   1,331   1,140   981 
Borrowings and debt  325   389   414   520   336 
           
Total interest expense  2,008   1,863   1,745   1,660   1,317 
           
Net interest income  8,000   7,794   7,910   7,964   7,711 
           
Provision for loan losses  (320)  (255)  (255)  (325)  (400)
Other income  2,632   2,489   2,457   2,263   2,283 
Other expenses  (6,643)  (6,435)  (6,770)  (6,530)  (6,172)
           
Income before income taxes  3,669   3,593   3,342   3,372   3,422 
           
Provision for income taxes  (611)  (591)  (540)  (525)  (559)
Net income$ 3,058 $ 3,002 $ 2,802 $ 2,847 $ 2,863 


FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Balance Sheets
(dollars in thousands)

At Period End: Sep. 30, 2019 Jun. 30, 2019 Mar. 31, 2019 Dec. 31, 2018 Sep. 30, 2018
Assets          
Cash and cash equivalents$ 18,687 $ 19,190 $ 15,310 $ 17,485 $ 16,944 
Investment securities  189,246   189,899   182,496   182,810   171,451 
Federal Home Loan Bank stock  3,818   4,396   3,663   6,339   4,717 
Loans and leases  750,470   735,685   713,761   733,771   715,413 
Allowance for loan losses  (9,441)  (9,495)  (9,522)  (9,747)  (9,944)
Premises and equipment, net  18,149   18,353   18,186   18,289   16,204 
Life insurance cash surrender value  23,094   22,926   22,761   20,615   20,464 
Other assets  17,401   16,085   17,565   11,540   14,605 
           
Total assets$ 1,011,424 $ 997,039 $ 964,220 $ 981,102 $ 949,854 
           
Liabilities          
Non-interest-bearing deposits$ 203,816 $ 215,973 $ 230,610 $ 194,731 $ 206,588 
Interest-bearing deposits  648,506   623,650   594,675   575,452   572,473 
Total deposits  852,322   839,623   825,285   770,183   779,061 
Short-term borrowings  24,355   29,105   5,906   76,366   40,269 
FHLB advances  15,000   15,000   21,704   31,704   31,704 
Other liabilities  14,958   11,885   13,583   9,292   8,768 
Total liabilities  906,635   895,613   866,478   887,545   859,802 
           
Shareholders' equity  104,789   101,426   97,742   93,557   90,052 
           
Total liabilities and shareholders' equity$ 1,011,424 $ 997,039 $ 964,220 $ 981,102 $ 949,854 
           
           
Average Quarterly Balances: Sep. 30, 2019 Jun. 30, 2019 Mar. 31, 2019 Dec. 31, 2018 Sep. 30, 2018
Assets          
Cash and cash equivalents$ 15,357 $ 14,518 $ 16,548 $ 14,682 $ 14,597 
Investment securities  194,125   189,704   184,017   183,548   169,280 
Loans and leases, net  727,441   704,748   710,351   715,974   696,678 
Premises and equipment, net  18,288   18,362   18,281   16,499   16,257 
Other assets  40,008   38,135   36,598   33,921   33,123 
           
Total assets$ 995,219 $ 965,467 $ 965,795 $ 964,624 $ 929,935 
           
Liabilities          
Non-interest-bearing deposits$ 198,188 $ 193,702 $ 195,349 $ 200,936 $ 203,530 
Interest-bearing deposits  630,810   602,161   598,582   573,211   554,652 
Total deposits  828,998   795,863   793,931   774,147   758,182 
Short-term borrowings  34,096   39,291   40,587   59,289   55,141 
FHLB advances  15,000   18,831   23,593   31,704   18,725 
Other liabilities  14,008   12,477   12,783   8,625   8,077 
Total liabilities  892,102   866,462   870,894   873,765   840,125 
           
Shareholders' equity  103,117   99,005   94,901   90,859   89,810 
           
Total liabilities and shareholders' equity$ 995,219 $ 965,467 $ 965,795 $ 964,624 $ 929,935 


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

           
           
  Three Months Ended
  Sep. 30, 2019 Jun. 30, 2019 Mar. 31, 2019 Dec. 31, 2018 Sep. 30, 2018
Selected returns and financial ratios          
Basic earnings per share$ 0.82 $ 0.79 $ 0.74 $ 0.76 $ 0.76 
Diluted earnings per share$ 0.80 $ 0.79 $ 0.73 $ 0.75 $ 0.75 
Dividends per share$ 0.26 $ 0.26 $ 0.26 $ 0.26 $ 0.24 
Yield on interest-earning assets (FTE)* 4.35% 4.36% 4.40% 4.26% 4.15%
Cost of interest-bearing liabilities 1.17% 1.13% 1.07% 0.99% 0.83%
Cost of funds 0.91% 0.88% 0.82% 0.76% 0.63%
Net interest spread (FTE)* 3.18% 3.23% 3.33% 3.27% 3.32%
Net interest margin (FTE)* 3.49% 3.54% 3.62% 3.54% 3.56%
Return on average assets 1.22% 1.25% 1.18% 1.17% 1.22%
Return on average equity 11.77% 12.16% 11.98% 12.43% 12.65%
Efficiency ratio (FTE)* 61.41% 61.47% 64.15% 62.66% 60.65%
Expense ratio 1.60% 1.64% 1.81% 1.76% 1.66%
           
           
  Nine Months Ended      
  Sep. 30, 2019 Sep. 30, 2018      
Basic earnings per share$ 2.35 $ 2.17       
Diluted earnings per share$ 2.32 $ 2.15       
Dividends per share$ 0.78 $ 0.72       
Yield on interest-earning assets (FTE)* 4.37% 4.12%      
Cost of interest-bearing liabilities 1.12% 0.70%      
Cost of funds 0.87% 0.53%      
Net interest spread (FTE)* 3.25% 3.42%      
Net interest margin (FTE)* 3.55% 3.61%      
Return on average assets 1.21% 1.21%      
Return on average equity 11.96% 12.34%      
Efficiency ratio (FTE)* 62.34% 61.91%      
Expense ratio 1.68% 1.72%      
           
Other financial data At period end:
(dollars in thousands except per share data) Sep. 30, 2019 Jun. 30, 2019 Mar. 31, 2019 Dec. 31, 2018 Sep. 30, 2018
Interest income adjustment to FTE*$ 186 $ 185 $ 187 $ 196 $ 182 
Book value per share$ 27.71 $ 26.82 $ 25.85 $ 24.89 $ 23.97 
Equity to assets 10.36% 10.17% 10.14% 9.54% 9.48%
Allowance for loan losses to:          
Total loans 1.26% 1.29% 1.34% 1.34% 1.40%
Non-accrual loans 2.45x 2.31x 2.54x 2.27x 2.63x
Non-accrual loans to total loans 0.51% 0.56% 0.53% 0.59% 0.53%
Non-performing assets to total assets 0.55% 0.62% 0.62% 0.64% 0.65%
Net charge-offs to average total loans 0.21% 0.21% 0.27% 0.13% 0.07%
           
Capital Adequacy Ratios          
Total risk-based capital ratio 15.56% 15.01% 15.24% 14.75% 14.87%
Common equity tier 1 risk-based capital ratio 14.31% 13.76% 13.99% 13.50% 13.61%
Tier 1 risk-based capital ratio 14.31% 13.76% 13.99% 13.50% 13.61%
Leverage ratio 10.20% 10.26% 9.99% 9.79% 9.93%
           

* Interest income was FTE adjusted, using the corporate federal tax rate of 21% for 2019 and 2018, to recognize the income from tax-exempt interest-earning assets as if the interest was taxable.

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Source: Fidelity Deposit & Discount Bank