DUNMORE, Pa., Feb. 3 /PRNewswire-FirstCall/ -- Fidelity D & D Bancorp, Inc. (BULLETIN BOARD: FDBC) , parent company of The Fidelity Deposit and Discount Bank, reported net income for the fourth quarter 2009 of $73,000 compared to $602,000 earned in the fourth quarter of 2008. Earnings per share on a fully diluted basis for the fourth quarter 2009 totaled $0.04 compared to $0.30 reported for the prior year period.
"Although 2009 and the latest quarter continue to be challenging times for our industry, we are very pleased that we continue to exceed the current regulatory requirements as a 'well capitalized' institution," stated Patrick J. Dempsey, Chairman of the Board. "We are committed to sound banking practices and it shows, such as the $26 million growth in deposits. During the fourth quarter, our experienced management team has focused its efforts on increased efficiencies in service to our customers and profitability for our shareholders. We pride ourselves on superior customer service with the most cost-effective delivery systems."
The year-over-year fourth quarter decline was primarily the result, before tax benefit, from an increase of $521,000 in FDIC insurance premiums, $515,000 in the provision for loan losses as well as $510,000 additional other-than-temporary impairment charges related to the investment in pooled trust preferred securities. Compared to the third quarter 2009, credit related losses narrowed with less required provision for loan losses and fewer security impairment charges, net interest income benefited $200,000 primarily from less interest expense due to the payoff of long-term debt and furthermore, other operating expenses were reduced.
Net loss for the year ended December 31, 2009 was $1,400,000, or $0.67 per share, compared to net income of $3,636,000, or $1.76 per share, for the year ended December 31, 2008. The decline in annual earnings resulted primarily from a $4,110,000 increase in provision for loan losses, additional other-than-temporary impairment charges of $2,864,000, plus increased FDIC insurance premiums of $1,046,000 and long-term debt prepayment interest costs that reduced net interest income by $505,000.
The increases in the provision for loan losses and impairment charges did not have a significant impact on the Bank's available liquidity or regulatory capital ratios, which exceed the current "well capitalized" regulatory requirements with a Total Risk Based Capital Ratio of 11.4%, Tier I Capital Ratio of 10.1% and Leverage Ratio of 9.7% as of December 31, 2009.
Net interest income was $5,126,000 for the quarter ended December 31, 2009, a 4% increase compared to the $4,908,000 recorded during the same quarter of 2008. The year-over-year earning-asset yield reduction on interest-earning assets lagged the effect the current interest rate environment had from lowering rates on interest-bearing liabilities, which as a result, net interest income increased $218,000. This net increase with a $12,405,000 reduction in average earning assets improved net interest margin to 3.99% for the fourth quarter of 2009, compared to 3.72% for same 2008 period.
Net interest income contracted for the year ended December 31, 2009, totaling $19,112,000 or a $165,000 decrease from $19,277,000 for 2008. The cost reductions over the year from lowering rates on interest-bearing liabilities kept pace with the effect the current interest rate environment had on lowering earning-asset yields. However, net interest income was negatively impacted by the prepayment interest costs of $505,000 from the third quarter early pay-off of long-term debt. Net interest margin was 3.71% and 3.60% for 2009 and 2008, respectively. The net interest margin increase was attributed to maintaining a stable level of net interest income while average earning assets decreased $14,530,000.
The provision for loan losses was $1,200,000 in the fourth quarter 2009 compared to $685,000 in the same 2008 period. The Company recorded provision for loan losses of $5,050,000 for the 2009 year compared to $940,000 in 2008. An increased provision was recorded from credit quality deterioration, primarily due to internally classified credit downgrades and commercial loan charge-offs. The ratio of non-performing assets to total assets at December 31, 2009 increased 162 basis-points to 2.58% from 0.96% at December 31, 2008. The ratio of non-accrual loans to net loans at December 31, 2009 increased 211 basis-points to 2.91%. Net charge-offs were $2,222,000 in 2009 and $1,019,000 in 2008. However, the allowance for loan losses ratio to total loans was 1.75% at December 31, 2009, up 67 basis points compared to 1.08% at December 31, 2008. The increased provision was also required to reinforce and fund the allowance for loan losses for heightened credit risks from a weakened economy and declining real estate values.
Total other income recorded for the quarter ended December 31, 2009 was $682,000 compared to $1,173,000 for the same quarter in 2008. The decrease in noninterest income was primarily due to the $542,000 other-than-temporary impairment on two pooled trust preferred securities in the quarter ended December 31, 2009 compared to $32,000 in the previous year's fourth quarter. The impairment charges recognized represent the expected credit loss on these pooled trust preferred securities. In the event further interest deferrals and defaults take place within the pooled trust preferred portfolio, additional other-than-temporary impairment credit losses could be recognized through future earnings. Excluding the impairment charges, other noninterest income was $1,224,000 for the quarter ended December 31, 2009 compared to $1,205,000 for the quarter ended December 31, 2008.
Total other income in 2009 totaled $2,161,000 as compared to $4,578,000 for 2008. Total other income decreased $2,417,000 in 2009, primarily from recognizing $2,864,000 additional other-than-temporary impairment charges, $271,000 less deposit service charge income and $178,000 in write-downs of foreclosed assets, all partially offset by $799,000 in added gains produced from mortgage banking services, compared to 2008. Excluding the impairment charges, other income would have been $5,461,000 for the year ended December 31, 2009 compared to $5,014,000 for the year ended December 31, 2008.
Total other operating expenses increased from $4,701,000 to $4,731,000 for the quarters ending December 31, 2008 and 2009, respectively. The other operating expenses for the quarter increased primarily from recognizing $521,000 in FDIC insurance premiums partially offset by $152,000 less professional service fees and a $237,000 decline in salary and benefit expense.
Total other operating expenses increased $1,030,000, or 6%, from $18,211,000 in 2008 to $19,241,000 for the year ending December 31, 2009. The increased operating expenses resulted principally from $1,046,000 higher FDIC insurance premiums and increased depreciation expense from the branch expansion in 2008, partially offset by less salary and benefit and advertising expenses.
Total assets as of December 31, 2009 were $556,017,000, a $19,702,000, or 3%, decrease from $575,719,000 at December 31, 2008. This decline resulted from continuing a deleveraging process, by utilizing proceeds from sales of residential mortgage loans to pay down long-term debt. This allowed the Company access to higher available liquidity and to strengthen regulatory capital ratios.
At December 31, 2009, net total loans decreased overall by $13,083,000, or 3%, to $423,124,000; the investment portfolio decreased $7,657,000 to $76,530,000; total deposits increased 6%, or $25,682,000, to $458,994,000; short-term borrowings decreased $21,597,000 to $16,533,000 and long-term debt decreased $20,000,000 to $32,000,000 as of December 31, 2009. Total shareholders' equity declined $3,286,000, to $45,675,000 at December 31, 2009, from retained earnings absorbing the net loss and $2,078,000, or $1.00 per share, of cash dividends paid.
Fidelity D & D Bancorp, Inc. serves Lackawanna and Luzerne Counties through The Fidelity Deposit and Discount Bank's eleven community banking offices. 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 through http://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 At Period End: December 31, 2009 December 31, 2008 -------------- ----------------- ----------------- Assets Total cash and cash equivalents $8,327,954 $12,771,147 Investment securities 76,529,998 84,187,579 Federal Home Loan Bank Stock 4,781,100 4,781,100 Loans and leases 431,919,022 441,036,694 Allowance for loan losses (7,573,603) (4,745,234) Premises and equipment, net 15,361,810 16,056,362 Life insurance cash surrender value 9,117,156 8,807,784 Other assets 17,553,834 12,823,565 ---------- ---------- Total assets $556,017,271 $575,718,997 ============ ============ Liabilities Non-interest-bearing deposits $70,890,578 $71,442,651 Interest-bearing deposits 388,103,880 361,869,281 ----------- ----------- Total deposits 458,994,458 433,311,932 Short-term borrowings 16,533,107 38,129,704 Long-term debt 32,000,000 52,000,000 Other liabilities 2,815,159 3,316,710 --------- --------- Total liabilities 510,342,724 526,758,346 Shareholders' equity 45,674,547 48,960,651 ---------- ---------- Total liabilities and shareholders' equity $556,017,271 $575,718,997 ============ ============ Average Year-to-date Balances: December 31, 2009 December 31, 2008 ------------------------------ ----------------- ----------------- Assets Total cash and cash equivalents $15,812,533 $14,604,486 Investment securities 83,633,697 119,789,209 Loans and leases, net 426,927,977 416,437,846 Premises and equipment, net 15,674,301 13,803,903 Other assets 23,227,334 19,182,727 ---------- ---------- Total assets $565,275,842 $583,818,171 ============ ============ Liabilities Non-interest-bearing deposits $70,285,476 $67,716,670 Interest-bearing deposits 388,304,096 371,583,475 ----------- ----------- Total deposits 458,589,572 439,300,145 Short-term borrowings and long- term debt 54,721,932 86,604,300 Other liabilities 3,827,831 4,504,215 --------- --------- Total liabilities 517,139,335 530,408,660 Shareholders' equity 48,136,507 53,409,511 ---------- ---------- Total liabilities and shareholders' equity $565,275,842 $583,818,171 ============ ============ FIDELITY D & D BANCORP, INC. Unaudited Condensed Consolidated Statements of Income Three Months Ended Twelve Months Ended ------------------ ------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2009 2008 2009 2008 --------- --------- --------- --------- Interest income Loans and leases $6,277,617 $6,911,146 $25,969,544 $27,564,288 Securities and other 895,244 1,272,950 3,939,729 6,397,146 ------- --------- --------- --------- Total interest income 7,172,861 8,184,096 29,909,273 33,961,434 Interest expense Deposits 1,616,269 2,454,253 7,895,576 11,118,194 Borrowings and debt 430,394 821,689 2,901,278 3,565,939 ------- ------- --------- --------- Total interest expense 2,046,663 3,275,942 10,796,854 14,684,133 --------- --------- ---------- ---------- Net interest income 5,126,198 4,908,154 19,112,419 19,277,301 Provision for loan losses 1,200,000 685,000 5,050,000 940,000 Other income 682,112 1,172,647 2,161,187 4,578,301 Other expenses 4,731,054 4,700,740 19,241,125 18,210,683 (Credit) provision for income taxes (196,008) 93,121 (1,617,314) 1,068,971 -------- ------ ---------- --------- Net income (loss) $73,264 $601,940 $(1,400,205) $3,635,948 ======= ======== =========== ========== Three Months Ended Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, 2009 2009 2009 2009 2008 --------- --------- --------- --------- --------- Interest income Loans and leases $6,277,617 $6,546,053 $6,470,352 $6,675,522 $6,911,146 Securities and other 895,244 907,433 985,161 1,151,891 1,272,950 ------- ------- ------- --------- --------- Total interest income 7,172,861 7,453,486 7,455,513 7,827,413 8,184,096 Interest expense Deposits 1,616,269 1,949,402 2,138,133 2,191,772 2,454,253 Borrowings and debt 430,394 1,083,252 576,811 810,821 821,689 ------- --------- ------- ------- ------- Total interest expense 2,046,663 3,032,654 2,714,944 3,002,593 3,275,942 --------- --------- --------- --------- --------- Net interest income 5,126,198 4,420,832 4,740,569 4,824,820 4,908,154 Provision for loan losses 1,200,000 3,125,000 300,000 425,000 685,000 Other income (loss) 682,112 (1,292,556) 1,458,269 1,313,362 1,172,647 Other expenses 4,731,054 5,109,295 4,738,834 4,661,942 4,700,740 (Credit) provision for income taxes (196,008) (1,895,339) 247,851 226,182 93,121 -------- ---------- ------- ------- ------ Net income (loss) $73,264 $(3,210,680) $912,153 $825,058 $601,940 ======= =========== ======== ======== ======== FIDELITY D & D BANCORP, INC. Unaudited Condensed Consolidated Balance Sheets Dec. 31, Sep. 30, Jun. 30, At Period End: 2009 2009 2009 -------------- --------- --------- --------- Assets Total cash and cash equivalents $8,327,954 $17,632,181 $15,569,573 Investment securities 76,529,998 83,142,117 77,319,094 Federal Home Loan Bank Stock 4,781,100 4,781,100 4,781,100 Loans and leases 431,919,022 428,439,731 427,432,128 Allowance for loan losses (7,573,603) (6,724,857) (5,215,736) Premises and equipment, net 15,361,810 15,514,474 15,544,799 Life insurance cash surrender value 9,117,156 9,038,561 8,962,081 Other assets 17,553,834 14,176,127 16,061,169 ---------- ---------- ---------- Total assets $556,017,271 $565,999,434 $560,454,208 ============ ============ ============ Liabilities Non-interest-bearing deposits $70,890,578 $73,990,068 $69,503,187 Interest-bearing deposits 388,103,880 403,268,503 384,370,177 ----------- ----------- ----------- Total deposits 458,994,458 477,258,571 453,873,364 Short-term borrowings 16,533,107 5,238,457 8,880,343 Long-term debt 32,000,000 32,000,000 42,000,000 Other liabilities 2,815,159 3,338,059 6,577,952 --------- --------- --------- Total liabilities 510,342,724 517,835,087 511,331,659 Shareholders' equity 45,674,547 48,164,347 49,122,549 ---------- ---------- ---------- Total liabilities and shareholders' equity $556,017,271 $565,999,434 $560,454,208 ============ ============ ============ Mar. 31, Dec. 31, At Period End: 2009 2008 -------------- --------- --------- Assets Total cash and cash equivalents $20,800,732 $12,771,147 Investment securities 78,949,503 84,187,579 Federal Home Loan Bank Stock 4,781,100 4,781,100 Loans and leases 426,269,981 441,036,694 Allowance for loan losses (5,097,641) (4,745,234) Premises and equipment, net 15,871,074 16,056,362 Life insurance cash surrender value 8,886,844 8,807,784 Other assets 16,323,980 12,823,565 ---------- ---------- Total assets $566,785,573 $575,718,997 ============ ============ Liabilities Non-interest-bearing deposits $69,296,833 $71,442,651 Interest-bearing deposits 394,857,294 361,869,281 ----------- ----------- Total deposits 464,154,127 433,311,932 Short-term borrowings 10,741,814 38,129,704 Long-term debt 42,000,000 52,000,000 Other liabilities 4,427,884 3,316,710 --------- --------- Total liabilities 521,323,825 526,758,346 Shareholders' equity 45,461,748 48,960,651 ---------- ---------- Total liabilities and shareholders' equity $566,785,573 $575,718,997 ============ ============ Dec. 31, Sep. 30, Jun. 30, Average Quarterly Balances: 2009 2009 2009 --------------------------- --------- --------- --------- Assets Total cash and cash equivalents $11,236,021 $16,582,979 $22,538,111 Investment securities 83,854,397 85,599,872 78,537,567 Loans and leases, net 425,502,519 425,582,260 422,830,387 Premises and equipment, net 15,402,408 15,503,416 15,751,986 Other assets 23,514,032 22,723,241 23,783,296 ---------- ---------- ---------- Total assets $559,509,377 $565,991,768 $563,441,347 ============ ============ ============ Liabilities Non-interest-bearing deposits $73,674,479 $70,412,455 $68,908,889 Interest-bearing deposits 390,741,705 391,990,603 389,822,588 ----------- ----------- ----------- Total deposits 464,416,184 462,403,058 458,731,477 Short-term borrowings and long-term debt 44,159,415 50,011,878 52,414,957 Other liabilities 3,465,228 4,102,285 4,372,934 --------- --------- --------- Total liabilities 512,040,827 516,517,221 515,519,368 Shareholders' equity 47,468,550 49,474,547 47,921,979 ---------- ---------- ---------- Total liabilities and shareholders' equity $559,509,377 $565,991,768 $563,441,347 ============ ============ ============ Mar. 31, Dec 31, Average Quarterly Balances: 2009 2008 --------------------------- --------- -------- Assets Total cash and cash equivalents $12,902,871 $11,389,500 Investment securities 86,550,978 90,153,057 Loans and leases, net 433,903,852 434,511,745 Premises and equipment, net 16,048,369 15,948,591 Other assets 22,889,530 21,628,663 ---------- ---------- Total assets $572,295,600 $573,631,556 ============ ============ Liabilities Non-interest-bearing deposits $68,083,243 $69,665,796 Interest-bearing deposits 380,508,523 366,709,783 ----------- ----------- Total deposits 448,591,766 436,375,579 Short-term borrowings and long-term debt 72,666,503 83,447,025 Other liabilities 3,366,585 4,093,554 --------- --------- Total liabilities 524,624,854 523,916,158 Shareholders' equity 47,670,746 49,715,398 ---------- ---------- Total liabilities and shareholders' equity $572,295,600 $573,631,556 ============ ============ FIDELITY D & D BANCORP, INC. Selected Financial Ratios and Other Data Three Months Ended Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, 2009 2009 2009 2009 2008 --------- --------- --------- --------- --------- Selected returns and financial ratios ---------------- Diluted earnings (loss) per share $0.04 $(1.55) $0.44 $0.40 $0.30 Dividends per share $0.25 $0.25 $0.25 $0.25 $0.25 Yield on interest- earning assets (FTE) 5.52% 5.67% 5.74% 5.97% 6.13% Cost of interest- bearing liabilities 1.87% 2.72% 2.46% 2.69% 2.90% Net interest spread 3.65% 2.95% 3.28% 3.28% 3.23% Net interest margin 3.99% 3.43% 3.70% 3.73% 3.72% Return on average assets 0.05% -2.25% 0.65% 0.58% 0.42% Return on average equity 0.61% -25.75% 7.63% 7.02% 4.82% Efficiency ratio 72.76% 77.39% 70.16% 70.33% 73.33% Expense ratio 2.50% 2.67% 2.16% 2.15% 2.35% Twelve Months Ended Dec. 31, Dec. 31, 2009 2008 --------- --------- Diluted (loss) earnings per share $(0.67) $1.76 Dividends per share $1.00 $1.00 Yield on interest- earning assets (FTE) 5.72% 6.27% Cost of interest- bearing liabilities 2.44% 3.20% Net interest spread 3.28% 3.07% Net interest margin 3.71% 3.60% Return on average assets -0.25% 0.62% Return on average equity -2.91% 6.81% Efficiency ratio 72.51% 72.98% Expense ratio 2.37% 2.25% Other data ---------- Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, 2009 2009 2009 2009 2008 --------- --------- --------- --------- --------- Book value per share $21.69 $23.01 $23.59 $21.94 $23.73 Equity to assets 8.21% 8.51% 8.76% 8.02% 8.50% Allowance for loan losses to: Total loans 1.75% 1.57% 1.22% 1.20% 1.08% Non-accrual loans 0.61x 0.85x 0.70x 0.70x 1.36x Non-accrual loans to net loans 2.91% 1.87% 1.75% 1.72% 0.80% Non-performing assets to total assets 2.58% 1.81% 1.57% 1.56% 0.96%
Fidelity D & D Bancorp, Inc.
CONTACT: Patrick J. Dempsey, Chairman of the Board, +1-570-342-8281;
Salvatore R. DeFrancesco, Jr., Treasurer and Chief Financial Officer,
+1-570-504-8000
Web Site: http://www.bankatfidelity.com/
