Fidelity D & D Bancorp, Inc. Reports First Quarter 2015 Financial Results

DUNMORE, Pa., April 29, 2015 /PRNewswire/ -- 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 March 31, 2015 of $1.6 million, an improvement of $0.1 million, or 8%, compared to $1.5 million for the first quarter of 2014.  Net interest income growth, along with a lower provision for loan losses, more than offset the non-interest expenses increase, when compared to the prior year first quarter.  Earnings per share on a diluted basis for the quarter were $0.63 and $0.61 for the three months ended March 31, 2015 and 2014, respectively.

"Fidelity's strong first quarter financial results set the stage for a successful 2015," stated Daniel J. Santaniello, President and Chief Executive Officer.  "The growth in earnings and core deposits, strong mortgage loan originations, and improved asset quality are the highlights for the first quarter.  I attribute the continued improvement to each and every Fidelity Banker's commitment to provide value through a customer-centric approach."

Net interest income increased $312 thousand, or 6%, to $5.6 million for the quarter ended March 31, 2015, from $5.3 million recorded during the first quarter of 2014.  Net interest income earned was higher, despite the 19 basis point decline in yield on interest earning assets outpacing the 7 basis point savings on rates of interest-bearing liabilities.  Additional revenue from a $36 million and $5 million larger average balance loan and investment portfolio, respectively, pushed interest income up by $302 thousand.  The Company also experienced lower interest costs, due primarily from a $6 million lower debt level and the continued lower repricing of certificates-of-deposits.  This more than offset the added interest expense from $33 million and $27 million growth in money market and interest-bearing checking account balances, respectively, netting to an $11 thousand interest expense savings. Cost of funds further declined 5 basis points from these interest savings plus the $5 million growth in average non-interest bearing deposits. The earning asset growth at lower yields pressured spread lower, but was moderated by interest cost savings, which reduced net interest margin by 15 basis points to 3.64% for the first quarter of 2015, compared to 3.79% for the same 2014 quarter.

A provision for loan losses of $150 thousand was recorded during the first quarter of 2015 compared to $300 thousand required for the same 2014 period. The provision for loan losses funded the allowance for loan losses for the loan growth experienced during the quarter.  Improved asset quality allowed for the overall reduction in provision for loan losses compared to last year's first quarter.  The allowance for loan losses was 1.77% of total loans at March 31, 2015 compared to the 1.84% of total loans at March 31, 2014.

Total other income recorded for the quarters ended March 31, 2015 and 2014 was $1.7 million.  Revenue growth occurred with a $101 thousand increase in gains from loans sold, increases of $59 thousand from loan service charges, $53 thousand in fiduciary fees and $12 thousand net loan servicing fees recognized during the first quarter of 2015, more than offset the $205 thousand fewer gains from the sale of securities recognized compared to the first quarter of 2014.

Total other operating expense increased $302 thousand, or 6%, to $5.1 million from $4.8 million for the quarters ended March 31, 2015 and 2014, respectively.  The other operating expenses primarily increased from $177 thousand more salary and employee benefits plus increases of $55 thousand from advertising and marketing, $34 thousand in additional foreclosed asset expenses, $24 thousand on added equipment depreciation and $20 thousand in professional expenses incurred during the 2015 period.

The Company's assets increased $26.0 million to total $702.5 million at March 31, 2015 compared to $676.5 million of total assets at December 31, 2014.  This asset growth resulted from $4.2 million added loans and leases and $28.6 million in securities; funded from utilizing $6.9 million in cash plus the $10.3 million increase in interest-bearing deposits, $4.5 million additional non-interest-bearing deposits and $9.8 million more short-term borrowings with repurchase agreement customers, plus a $1.3 million increase in shareholders' equity.

Fidelity D & D Bancorp, Inc. has built a strong history as trusted advisors to the customers served by The Fidelity Deposit and Discount Bank, and is proud to be an active member of the community of Northeastern Pennsylvania.  The Company serves Lackawanna and Luzerne Counties through The Fidelity Deposit and Discount Bank's 11 community banking office locations providing personal and business banking products and services, including wealth management assistance 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 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 impact of new laws and regulations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the regulations promulgated there under;
• impacts of the new 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 banking 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;
• 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;
• volatility in the securities markets;
• 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.

SOURCE Fidelity D & D Bancorp, Inc.

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