DUNMORE, Pa., Oct. 18 /PRNewswire-FirstCall/ -- Fidelity D & D Bancorp, Inc., (BULLETIN BOARD: FDBC) , parent company of The Fidelity Deposit and Discount Bank, announced net income for the third quarter ended September 30, 2006 of $1,030,000, or $0.51 per share. Third quarter 2005 net income was $1,294,000, or $0.64 per share.
Growth in deposits for the nine months ending September 30, 2006 was over $40.2 million. The deposit growth allowed for reduction in higher-costing borrowings resulting in total asset growth of $18.7 million. The Company also reported continuing progress in reducing non-performing loans in the third quarter 2006. These actions led to a three basis point upturn in net interest margin and over $91,000 improvement in net income reported over the second quarter 2006.
According to Steve Ackmann, President and CEO, "This quarter saw our Company make significant progress in several areas. As a result of sustained efforts, we have been able to make considerable progress in reducing our non- performing assets, resulting in interest income improvements that not only helped this quarter, but will help going forward. Further, we have been able to reduce our borrowed funding costs, another positive step in our efforts to improve the revenue profile of the bank. We are also encouraged by the 11% increase in deposits and the 2% increase in loans this year. The current rate environment for banks is a difficult one, but the third quarter saw our Company make improvements that should help both in the short and long run."
Net income for the nine months ended September 30, 2006 was $3,000,000 compared to net income of $3,450,000 for the same 2005 period. Earnings per share were $1.47 and $1.70 for the nine months ended September 30, 2006 and 2005, respectively.
The earnings difference reported resulted primarily from expenses incurred by the Company through investment in qualified personnel and information technology systems and equipment. These steps were done to better serve our customers and continue growing deposits, loans and assets under management within Trust and Financial Services divisions. The Company believes these investments today will lead to a stronger financial condition and ultimately enhance financial performance.
Net interest income was $4,313,000 for the quarter ended September 30, 2006, a slight decrease from $4,362,000 recorded during the same quarter of 2005.
Total interest income that increased from $7,324,000 to $8,595,000 was offset by an interest expense increase of $1,319,000 from $2,962,000 to $4,281,000 for the quarters ended September 30, 2005 and 2006, respectively. Yields on earning assets improved mostly from higher market rates during the third quarter of 2006, compared to the same period last year. These improved yields were offset by the upward repricing of liabilities. A higher rate paid during the third quarter of 2006 was the primary reason interest expense increased as compared to the same 2005 quarter. As an overall result, net interest margin decreased 26 basis points to 3.29% in the third quarter of 2006, compared to 3.55% for the third quarter of 2005.
During the third quarter of 2006, the provision for loan losses was $75,000 compared to $300,000 in the same quarter of 2005. The Company's continuing effort to improve the credit profile of the loan portfolio has reduced the non-performing assets by almost half. Accordingly, the ratio of non-accrual loans to net loans at September 30, 2006 was 1.0%, down from 2.4% as of September 30, 2005. The allowance for loan losses was 1.41% and 1.52% of total loans at September 30, 2006 and 2005, respectively. The allowance for loan losses to non-performing loans was 115% at September 30, 2006 from 60% at September 30, 2005, one of the best levels for the Company in the past decade.
Total other income recorded for the quarter ended September 30, 2006 was $1,136,000 compared with $1,228,000 for the same quarter in 2005. Third quarter 2006 other income was mainly lower from $64,000 of gains recorded on leased and foreclosed asset sales occurring only in the third quarter of 2005.
Total other operating expenses increased 11%, from $3,591,000 to $3,996,000 for the quarters ending September 30, 2005 and 2006, respectively. This operating expense increase resulted primarily from added salary and employee benefits expense, increased equipment expenses and further advertising expenditures over the same prior year period.
The Company's total assets were $562,840,000 at September 30, 2006 as compared to $544,061,000 at December 31, 2005.
Fidelity D & D Bancorp, Inc. serves Lackawanna and Luzerne Counties through The Fidelity Deposit and Discount Bank's 12 community banking offices and 20 ATM locations.
For more information please visit our web site at http://www.the-fidelity.com/.
This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various factors. These factors include the possibility that increased demand or prices for the company's financial services and products may not occur, changing economic, interest rate and competitive conditions, technological developments and other risks and uncertainties, including those detailed in the company's filings with the Securities and Exchange Commission.
FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Balance Sheets
At Period End: September 30, December 31,
2006 2005
Assets
Total cash and cash equivalents $20,832,779 $12,594,540
Investment securities 101,740,346 97,678,573
Federal Home Loan Bank Stock 3,259,400 4,628,200
Loans and leases 415,915,591 409,557,328
Allowance for loan losses (5,843,538) (5,984,649)
Premises and equipment, net 11,296,696 11,683,148
Life insurance cash surrender value 8,105,171 7,891,898
Other assets 7,534,038 6,011,660
Total assets $562,840,483 $544,060,698
Liabilities
Non-interest-bearing deposits $71,548,817 $70,361,086
Interest-bearing deposits 348,180,970 309,137,554
Total deposits 419,729,787 379,498,640
Short-term borrowings 22,826,739 28,772,997
Long-term debt 65,590,062 83,704,188
Other liabilities 3,730,970 3,238,844
Total liabilities 511,877,558 495,214,669
Shareholders' equity 50,962,925 48,846,029
Total liabilities and
shareholders' equity $562,840,483 $544,060,698
Average Quarterly Balances: September 30, December 31,
2006 2005
Assets
Total cash and cash equivalents $ 10,133,961 $9,958,499
Investment securities 116,520,987 106,836,106
Loans and leases, net 414,380,326 398,021,831
Premises and equipment, net 11,480,499 11,297,689
Other assets 12,652,168 13,299,448
Total assets $565,167,941 $539,413,573
Liabilities
Non-interest-bearing deposits $ 68,170,366 $ 66,163,112
Interest-bearing deposits 349,113,993 300,187,888
Total deposits 417,284,359 366,351,000
Short-term borrowings and
long-term debt 93,953,798 121,063,406
Other liabilities 3,968,526 3,653,059
Total liabilities 515,206,683 491,067,465
Shareholders' equity 49,961,258 48,346,108
Total liabilities and
shareholders' equity $565,167,941 $539,413,573
FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Statements of Income
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2006 2005 2006 2005
Interest income
Loans and leases $7,226,814 $6,139,714 $20,858,722 $ 17,789,858
Securities and other 1,367,752 1,184,256 4,000,449 3,611,214
Total interest
income 8,594,566 7,323,970 24,859,171 21,401,072
Interest expense
Deposits 3,132,402 1,746,220 8,279,425 4,978,215
Borrowings and debt 1,148,667 1,215,494 3,770,516 3,466,648
Total interest
expense 4,281,069 2,961,714 12,049,941 8,444,863
Net interest
income 4,313,497 4,362,256 12,809,230 12,956,209
Provision for
loan losses 75,000 300,000 325,000 680,000
Other income 1,136,275 1,228,187 3,349,052 3,101,718
Other expenses 3,995,764 3,590,787 11,866,663 10,768,374
Provision for
income taxes 349,032 405,311 966,392 1,160,011
Net income $1,029,976 $1,294,345 $3,000,227 $3,449,542
Selected financial ratios and other data (1):
Three months ended Nine months ended
September 30, September 30,
Selected returns and 2006 2005 2006 2005
financial ratios
Diluted earnings
per share $0.51 $0.64 $1.47 $1.70
Dividends per share $0.22 $0.20 $0.66 $0.60
Yield on interest-
earning assets (FTE) 6.45% 5.87% 6.29% 5.75%
Cost of interest-
bearing liabilities 3.83% 2.84% 3.62% 2.70%
Net interest spread 2.62% 3.03% 2.67% 3.05%
Net interest margin 3.29% 3.55% 3.30% 3.52%
Return on average
assets 0.72% 0.96% 0.71% 0.86%
Return on average
equity 8.18% 10.62% 8.12% 9.73%
Efficiency ratio 71.85% 61.63% 71.80% 65.12%
Expense ratio 2.03% 1.72% 2.03% 1.91%
Other data
As of September 30, As of December 31,
2006 2005 2005
Book value per share $24.82 $23.76 $23.95
Equity to assets 9.05% 8.99% 8.98%
Allowance for loan losses to:
Total loans 1.41% 1.52% 1.46%
Non-accrual loans 1.43x 0.65x 0.63x
Non-accrual loans to net loans 1.00% 2.39% 2.34%
Non-performing assets to total
assets 0.93% 1.87% 1.78%
(1)Per share data, for 2005, has been adjusted to reflect the retroactive
effect of a 10% stock dividend paid on February 15, 2006.
