Exhibit 99.1
PRESS RELEASE
FIDELITY D & D BANCORP, INC.
DATE: January 18, 2006
| | |
Steven C. Ackmann | | Salvatore R. DeFrancesco, Jr. |
President and | | Treasurer and |
Chief Executive Officer | | Chief Financial Officer |
570-346-4156 | | 570-504-8000 |
FIDELITY D & D BANCORP, INC.
REPORTS 2005 FINANCIAL PERFORMANCE
Dunmore, PA, Fidelity D & D Bancorp, Inc. (OTC Bulletin Board: FDBC), parent company of The Fidelity Deposit and Discount Bank, reported net income of $4,592,000, or $2.48 per diluted share, for the year ended December 31, 2005, a $1,228,000, or 36%, increase as compared to net income of $3,364,000 or $1.84 per diluted share for the year ended December 31, 2004. The reported 2005 net income was the highest in the Company’s 102 year history.
Net interest income increased $1,084,000, or 7%, to $17,299,000 in 2005 from $16,215,000 in 2004. The rising short-term interest rate environment throughout 2005 incrementally priced investments and loans portfolios to higher yields. The Company utilized the interest rate increases during the year to increase earning asset yields by 48 basis points. Compared to 2004 results, the increased yield more than offset the reduced volume in average earning assets. As a result, total interest income increased $1,625,000, or 6%, from $27,395,000 in 2004 to $29,020,000 in 2005. Rates paid on deposit products and borrowings were also higher during 2005. However, the reduced volume of average interest-bearing liabilities and the ability to insulate certain products from the effects of rising short-term interest rates helped contain interest expense. Accordingly, interest expense increased $541,000, or 5%, from $11,180,000 in 2004 to $11,721,000 in 2005. Net interest margin increased 31 basis points, to 3.51% in 2005 from 3.20% in 2004.
The 2005 provision for loan losses was $830,000 compared to $2,150,000 in 2004. The significant reduction was due to the improved quality of the loan portfolio with a decline in loans migrating into non-performing status and 28% less net charge-offs in 2005, as compared to 2004. The ratio of allowance for loan losses to total loans was 1.46% at December 31, 2005, down from 1.54% at December 31, 2004.
Total other income was stable in 2005 as compared to 2004. The amount of fees and service charges collected offset lower gains realized on loans sold along with losses recorded from the final sales of leased automobiles.
Total other expenses increased $750,000, or 5%, from $13,827,000 in 2004 to $14,577,000 in 2005. The increase was primarily due to elevated salaries and benefits cost, added professional services, increased advertising campaign expenses and more collection expenses incurred throughout 2005.
The Company reported a $7,386,000, or 1%, increase in total assets from $536,675,000 on December 31, 2004 to $544,061,000 on December 31, 2005. Loans increased by $21,447,000, or 6%, to $409,557,000, primarily from growth in home equity installment loans during 2005. Investments decreased by $17,990,000, or 16%, to $97,679,000 at December 31, 2005. Total deposits increased $13,883,000 to $379,499,000 at December 31, 2005, an increase of 4% from the balance at December 31, 2004. The overall increase in deposits resulted principally from money market, NOW and demand deposit growth. The ratio of time to total deposits at year-end was 42%. Short-term borrowings decreased $21,761,000, or 43%, to $28,773,000 with long-term debt increasing $12,585,000, or 18%, to $83,704,000 during 2005.
Shareholders’ equity as of December 31, 2005 increased to $48,846,000 from $46,367,000 on December 31, 2004. The increase in shareholders’ equity of $2,479,000 resulted primarily from the $2,967,000 addition to retained earnings, $523,000 growth in common stock partially offset by $1,011,000 net loss recorded in Other Comprehensive Loss. Dividends declared by the Company during 2005 were $1,624,000, of which $491,000 was reinvested through the dividend reinvestment plan.
“We are pleased to report these earnings showing a 36% increase in net income over last year. It is particularly gratifying to know that these were achieved in a year where we continued to make progress in improving our asset quality, while at the same time growing our earning asset base,” stated Steven C. Ackmann, President and CEO. “This performance will serve as a foundation toward our goal of building a great Community Bank that focuses on both service and convenience to our customers and solid returns to our shareholders.”
Fidelity D & D Bancorp, Inc. serves Lackawanna and Luzerne Counties through The Fidelity Deposit and Discount Bank’s 12 community banking offices and 20 automated teller machine locations.
For more information visit our web site at 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
As of December 31, 2005 and 2004
| | December 31, 2005 | | December 31, 2004 | |
At Period End: | | | | | |
Assets | | | | | |
Total cash and cash equivalents | | $ | 12,594,540 | | $ | 10,216,394 | |
Investment securities | | 97,678,573 | | 115,668,818 | |
Federal Home Loan Bank Stock | | 4,628,200 | | 4,568,700 | |
Loans and leases | | 409,557,328 | | 388,110,551 | |
Allowance for loan losses | | (5,984,649 | ) | (5,987,798 | ) |
Premises and equipment, net | | 11,683,148 | | 11,163,292 | |
Life insurance cash surrender value | | 7,891,898 | | 7,613,437 | |
Other assets | | 6,011,660 | | 5,321,744 | |
| | | | | |
Total assets | | $ | 544,060,698 | | $ | 536,675,138 | |
| | | | | |
Liabilities | | | | | |
Non-interest-bearing deposits | | $ | 70,361,086 | | $ | 65,357,535 | |
Interest-bearing deposits | | 309,137,554 | | 300,257,800 | |
Total deposits | | 379,498,640 | | 365,615,335 | |
Short-term borrowings | | 28,772,997 | | 50,534,046 | |
Long-term debt | | 83,704,188 | | 71,119,188 | |
Other liabilities | | 3,238,844 | | 3,039,809 | |
Total liabilities | | 495,214,669 | | 490,308,378 | |
| | | | | |
Shareholders’ equity | | 48,846,029 | | 46,366,760 | |
| | | | | |
Total liabilities and shareholders’ equity | | $ | 544,060,698 | | $ | 536,675,138 | |
| | | | | |
| | December 31, 2005 | | December 31, 2004 | |
Average Quarterly Balances: | | | | | |
Assets | | | | | |
Total cash and cash equivalents | | $ | 9,958,499 | | $ | 10,725,486 | |
Investment securities | | 106,836,106 | | 115,428,739 | |
Loans and leases, net | | 398,021,831 | | 385,800,421 | |
Premises and equipment, net | | 11,297,689 | | 10,980,042 | |
Other assets | | 13,299,448 | | 13,327,091 | |
| | | | | |
Total assets | | $ | 539,413,573 | | $ | 536,261,779 | |
| | | | | |
Liabilities | | | | | |
Non-interest-bearing deposits | | $ | 66,163,112 | | $ | 67,093,122 | |
Interest-bearing deposits | | 300,187,888 | | 301,169,526 | |
Total deposits | | 366,351,000 | | 368,262,648 | |
Short-term borrowings and long-term debt | | 121,063,406 | | 117,219,355 | |
Other liabilities | | 3,653,059 | | 3,136,106 | |
Total liabilities | | 491,067,465 | | 488,618,109 | |
| | | | | |
Shareholders’ equity | | 48,346,108 | | 47,643,670 | |
| | | | | |
Total liabilities and shareholders’ equity | | $ | 539,413,573 | | $ | 536,261,779 | |
FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Statements of Income
| | Three Months Ended | | Twelve Months Ended | |
| | December 31, 2005 | | December 31, 2004 | | December 31, 2005 | | December 31, 2004 | |
Interest income | | | | | | | | | |
Loans and leases | | $ | 6,491,202 | | $ | 5,645,889 | | $ | 24,281,060 | | $ | 22,266,108 | |
Securities and other | | 1,127,987 | | 1,235,388 | | 4,739,201 | | 5,129,383 | |
| | | | | | | | | |
Total interest income | | 7,619,189 | | 6,881,277 | | 29,020,261 | | 27,395,491 | |
| | | | | | | | | |
Interest expense | | | | | | | | | |
Deposits | | 1,949,785 | | 1,561,490 | | 6,928,000 | | 6,736,796 | |
Borrowings and debt | | 1,326,338 | | 1,146,455 | | 4,792,986 | | 4,443,339 | |
| | | | | | | | | |
Total interest expense | | 3,276,123 | | 2,707,945 | | 11,720,986 | | 11,180,135 | |
| | | | | | | | | |
Net interest income | | 4,343,066 | | 4,173,332 | | 17,299,275 | | 16,215,356 | |
| | | | | | | | | |
Provision for loan losses | | 150,000 | | 450,000 | | 830,000 | | 2,150,000 | |
Other income | | 1,062,974 | | 995,362 | | 4,165,281 | | 4,161,402 | |
Other expenses | | 3,807,784 | | 3,355,161 | | 14,576,747 | | 13,826,690 | |
Provision for income taxes | | 306,101 | | 358,371 | | 1,466,112 | | 1,035,594 | |
Net income | | $ | 1,142,155 | | $ | 1,005,162 | | $ | 4,591,697 | | $ | 3,364,474 | |
| | | | | | | | | |
Selected financial ratios and other data: | | | | | | | |
| | | | | | | | | |
| | Three months ended | | Twelve months ended | |
| | December 31, | | December 31, | |
| | 2005 | | 2004 | | 2005 | | 2004 | |
Selected returns and financial ratios | | | | | | | | | |
Diluted earnings per share | | $ | 0.61 | | $ | 0.55 | | $ | 2.48 | | $ | 1.84 | |
Dividends per share | | $ | 0.22 | | $ | 0.22 | | $ | 0.88 | | $ | 0.88 | |
Yield on interest-earning assets (FTE) | | 6.02 | % | 5.42 | % | 5.82 | % | 5.34 | % |
Cost of interest-bearing liabilities | | 3.09 | % | 2.53 | % | 2.80 | % | 2.56 | % |
Net interest spread | | 2.93 | % | 2.89 | % | 3.02 | % | 2.78 | % |
Net interest margin | | 3.48 | % | 3.32 | % | 3.51 | % | 3.20 | % |
Return on average assets | | 0.84 | % | 0.74 | % | 0.86 | % | 0.61 | % |
Return on average equity | | 9.37 | % | 8.68 | % | 9.64 | % | 7.51 | % |
Efficiency ratio | | 65.87 | % | 63.54 | % | 65.99 | % | 64.45 | % |
Expense ratio | | 2.02 | % | 1.72 | % | 1.93 | % | 1.69 | % |
| | | | | | | | | |
Other data | | | | | | | | | |
| | As of December 31, | | | | | |
| | 2005 | | 2004 | | | | | |
Book value per share | | $ | 26.34 | | $ | 25.21 | | | | | |
Equity to assets | | 8.98 | % | 8.64 | % | | | | |
Allowance for loan losses to: | | | | | | | | | |
Total loans | | 1.46 | % | 1.54 | % | | | | |
Non-accrual loans | | 63.31 | % | 60.46 | % | | | | |
Non-accrual loans to net loans | | 2.34 | % | 2.59 | % | | | | |
Non-performing assets to total assets | | 1.78 | % | 1.99 | % | | | | |
