Exhibit 99.1
FIDELITY D & D BANCORP, INC.
FOR IMMEDIATE RELEASE
Date: October 24, 2008
Contacts:
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.
THIRD QUARTER 2008 FINANCIAL RESULTS
Dunmore, PA – 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 September 30, 2008 of $741,000 compared to $1,178,000 for the same quarter of 2007. Earnings per share on a fully diluted basis for the quarter totaled $0.35 compared to $0.57 for the prior year third quarter. The decrease for the quarter was primarily the result from grand opening costs for the new West Scranton branch plus a non-cash other-than-temporary impairment charge, which was recorded during the quarter ended September 30, 2008.
Net income for the nine months ended September 30, 2008 was $3,034,000 compared to net income of $3,381,000 for the same 2007 period. Earnings per share fully diluted basis were $1.46 and $1.64 for the nine months ended September 30, 2008 and 2007, respectively.
A $266,000 non-cash other-than-temporary impairment charge, net of tax, related to the Company’s investment portfolio was recorded during the quarter ended September 30, 2008. The impairment charge, required by generally accepted accounting principles, had no impact on the Company’s liquidity or regulatory capital, which soundly exceeds the “well capitalized” regulatory requirements. The impairment charge primarily relates to the Company’s investment in bank pooled preferred term securities, plus an impairment charge on Fannie Mae common stock. The Company has no exposure to Fannie Mae or Freddie Mac preferred stock or common stock of Freddie Mac. The carrying values of a preferred term security and Fannie Mae stock have been written down to their fair market values as of September 30, 2008. Excluding this impairment charge, net operating earnings (see table below) were $1,007,000, or $0.48 per share on a fully diluted basis, for the third quarter of 2008 and $3,300,000, or $1.59 per share on a fully diluted basis, for the first nine months of 2008.
Net interest income increased by $457,000, or 10%, to $4,879,000 for the quarter ended September 30, 2008 from $4,422,000 recorded during the same quarter of 2007. Lower costs on interest-bearing deposits, repurchase agreements and long-term debt, partially reduced by the lost spread on $35 million deleveraging to reduce exposure to overnight borrowings, resulted in additional net interest income earned for the third quarter of 2008. This improved the net interest margin to 3.62% for the third quarter of 2008 from 3.31% for same 2007 period.
Net interest income increased 10% for the nine months ended September 30, 2008 to $14,369,000 from $13,049,000 recorded during the same period of 2007. Net interest margin was 3.57% during the nine months of 2008, up 23 basis points from 3.34% during the same 2007 period.
A provision for loan loss was required primarily as a result of loan growth during the third quarter of 2008. The provision for loan loss was $130,000 for the third quarter and $255,000 for the first nine month period of 2008, as compared to a $60,000 credit in each of the same 2007 periods. The allowance for loan losses was 0.98% of total loans at September 30, 2008, down from 1.17% at September 30, 2007.
Steven C. Ackmann, President and CEO stated, “The ongoing credit market problems that we have been experiencing over the past several months got considerably more profound in the third quarter. Many instruments in the credit market are experiencing historically low values due to a lack of buyers as larger banks liquidate positions to deleverage their balance sheets. We continue to monitor local economic conditions for signs of strain that could impact our borrowers as the economic conditions evolve. On a positive note, our credit quality and past dues are at the lowest levels in years, and our new West Scranton Office has opened to strong deposit growth and rave reviews by customers.”
Total other income recorded for the quarter ended September 30, 2008 was $844,000 compared with $1,309,000 for the same quarter in 2007. The decrease in noninterest income was primarily due to the other-than-temporary impairment on securities available-for-sale in the quarter ended September 30, 2008. Excluding the impairment charges, other noninterest income was $1,247,000 for the quarter ended September 30, 2008. Total other income for the nine months ended September 30, 2008 was $3,406,000 compared to $3,852,000 for the same period in 2007.
Total other operating expenses increased from $4,189,000 to $4,673,000 for the quarters ending September 30, 2007 and 2008, respectively. The operating expense increase resulted primarily from salary and benefit expenses plus the grand opening of the West Scranton Branch during the third quarter of 2008. Total other operating expenses increased from $12,390,000 for the nine months ending September 30, 2007 to $13,510,000 for 2008.
The Company’s assets totaled $569,543,000 at September 30, 2008 compared to $587,413,000 at December 31, 2007.
Fidelity D & D Bancorp, Inc. serves Lackawanna and Luzerne Counties through The Fidelity Deposit and Discount Bank’s twelve 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 located through www.bankatfidelity.com.
The following table reconciles the determination of net operating earnings to net income as prepared in accordance with generally accepted accounting principles:
| | Three Months Ended | | Nine Months Ended | |
| | September 30, 2008 | | September 30, 2008 | |
| | | | Diluted | | | | Diluted | |
(dollars in thousands, | | | | per | | | | per | |
except per share data) | | Amount | | share | | Amount | | share | |
| | | | | | | | | |
Reported net income | | $ | 741 | | $ | 0.35 | | $ | 3,034 | | $ | 1.46 | |
Other-than-temporary Impairment, net of tax | | 266 | | 0.13 | | 266 | | 0.13 | |
Net operating earnings | | $ | 1,007 | | $ | 0.48 | | $ | 3,300 | | $ | 1.59 | |
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: | | Sep. 30, 2008 | | Jun. 30, 2008 | | Mar. 31, 2008 | | Dec. 31, 2007 | | Sep. 30, 2007 | |
| | | | | | | | | | | |
Assets | | | | | | | | | | | |
Total cash and cash equivalents | | $ | 13,375,299 | | $ | 16,040,466 | | $ | 23,378,954 | | $ | 10,408,816 | | $ | 13,371,112 | |
Investment securities | | 87,179,549 | | 129,244,167 | | 136,320,024 | | 122,984,160 | | 121,896,653 | |
Federal Home Loan Bank Stock | | 4,770,700 | | 4,358,300 | | 3,387,800 | | 3,302,900 | | 3,558,300 | |
Loans and leases | | 431,293,559 | | 418,650,319 | | 399,582,768 | | 427,076,030 | | 426,163,776 | |
Allowance for loan losses | | (4,205,566 | ) | (4,188,571 | ) | (4,378,924 | ) | (4,824,401 | ) | (4,990,855 | ) |
Premises and equipment, net | | 16,018,219 | | 12,912,023 | | 12,947,438 | | 12,964,932 | | 13,306,479 | |
Life insurance cash surrender value | | 8,728,568 | | 8,645,597 | | 8,564,950 | | 8,488,663 | | 8,408,987 | |
Other assets | | 12,383,084 | | 12,901,595 | | 14,073,523 | | 7,011,455 | | 7,386,687 | |
| | | | | | | | | | | |
Total assets | | $ | 569,543,412 | | $ | 598,563,896 | | $ | 593,876,533 | | $ | 587,412,555 | | $ | 589,101,139 | |
| | | | | | | | | | | |
Liabilities | | | | | | | | | | | |
Non-interest-bearing deposits | | $ | 69,619,234 | | $ | 74,765,086 | | $ | 69,486,801 | | $ | 64,795,621 | | $ | 70,544,329 | |
Interest-bearing deposits | | 365,812,303 | | 373,468,779 | | 386,356,675 | | 360,912,740 | | 368,512,228 | |
Total deposits | | 435,431,537 | | 448,233,865 | | 455,843,476 | | 425,708,361 | | 439,056,557 | |
Short-term borrowings | | 17,086,314 | | 29,674,336 | | 9,879,537 | | 39,656,354 | | 28,579,498 | |
Long-term debt | | 62,071,661 | | 62,285,582 | | 62,494,906 | | 62,708,677 | | 62,917,875 | |
Other liabilities | | 4,335,911 | | 5,318,030 | | 9,465,660 | | 4,147,869 | | 4,658,726 | |
Total liabilities | | 518,925,423 | | 545,511,813 | | 537,683,579 | | 532,221,261 | | 535,212,656 | |
| | | | | | | | | | | |
Shareholders’ equity | | 50,617,989 | | 53,052,083 | | 56,192,954 | | 55,191,294 | | 53,888,483 | |
| | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 569,543,412 | | $ | 598,563,896 | | $ | 593,876,533 | | $ | 587,412,555 | | $ | 589,101,139 | |
Average Quarterly Balances: | | Sep. 30, 2008 | | Jun. 30, 2008 | | Mar. 31, 2008 | | Dec. 31, 2007 | | Sep. 30, 2007 | |
| | | | | | | | | | | |
Assets | | | | | | | | | | | |
Total cash and cash equivalents | | $ | 11,483,829 | | $ | 12,025,621 | | $ | 23,587,839 | | $ | 10,518,246 | | $ | 10,793,137 | |
Investment securities | | 117,713,728 | | 138,429,282 | | 133,209,250 | | 127,523,724 | | 118,204,518 | |
Loans and leases, net | | 421,771,678 | | 402,874,033 | | 406,336,700 | | 422,759,661 | | 420,402,304 | |
Premises and equipment, net | | 13,315,976 | | 12,951,487 | | 12,981,354 | | 13,138,740 | | 13,311,760 | |
Other assets | | 19,744,364 | | 19,358,141 | | 15,966,685 | | 15,601,033 | | 15,406,872 | |
| | | | | | | | | | | |
Total assets | | $ | 584,029,575 | | $ | 585,638,564 | | $ | 592,081,828 | | $ | 589,541,404 | | $ | 578,118,591 | |
| | | | | | | | | | | |
Liabilities | | | | | | | | | | | |
Non-interest-bearing deposits | | $ | 69,069,124 | | $ | 65,591,257 | | $ | 66,504,221 | | $ | 69,565,292 | | $ | 72,383,671 | |
Interest-bearing deposits | | 360,426,504 | | 378,477,080 | | 380,896,695 | | 364,668,618 | | 359,341,338 | |
Total deposits | | 429,495,628 | | 444,068,337 | | 447,400,916 | | 434,233,910 | | 431,725,009 | |
Short-term borrowings and long-term debt | | 97,685,420 | | 81,129,443 | | 84,068,238 | | 95,511,724 | | 88,544,109 | |
Other liabilities | | 4,466,079 | | 5,005,066 | | 4,456,310 | | 4,710,308 | | 4,723,440 | |
Total liabilities | | 531,647,127 | | 530,202,846 | | 535,925,464 | | 534,455,942 | | 524,992,558 | |
| | | | | | | | | | | |
Shareholders’ equity | | 52,382,448 | | 55,435,718 | | 56,156,364 | | 55,085,462 | | 53,126,033 | |
| | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 584,029,575 | | $ | 585,638,564 | | $ | 592,081,828 | | $ | 589,541,404 | | $ | 578,118,591 | |
FIDELITY D & D BANCORP, INC.
Unaudited Condensed Consolidated Statements of Income
| | Three Months Ended | | Nine Months Ended | |
| | Sep. 30, 2008 | | Sep. 30, 2007 | | Sep. 30, 2008 | | Sep. 30, 2007 | |
Interest income | | | | | | | | | |
Loans and leases | | $ | 6,905,422 | | $ | 7,345,777 | | $ | 20,653,142 | | $ | 21,890,563 | |
Securities and other | | 1,514,018 | | 1,546,569 | | 5,124,196 | | 4,317,977 | |
| | | | | | | | | |
Total interest income | | 8,419,440 | | 8,892,346 | | 25,777,338 | | 26,208,540 | |
| | | | | | | | | |
Interest expense | | | | | | | | | |
Deposits | | 2,598,805 | | 3,420,693 | | 8,663,941 | | 9,977,394 | |
Borrowings and debt | | 941,488 | | 1,049,298 | | 2,744,250 | | 3,182,045 | |
| | | | | | | | | |
Total interest expense | | 3,540,293 | | 4,469,991 | | 11,408,191 | | 13,159,439 | |
| | | | | | | | | |
Net interest income | | 4,879,147 | | 4,422,355 | | 14,369,147 | | 13,049,101 | |
| | | | | | | | | |
Provision (credit) for loan losses | | 130,000 | | (60,000 | ) | 255,000 | | (60,000 | ) |
Other income | | 844,443 | | 1,308,761 | | 3,405,654 | | 3,851,538 | |
Other expenses | | 4,672,654 | | 4,189,171 | | 13,509,943 | | 12,389,767 | |
Provision for income taxes | | 179,821 | | 424,023 | | 975,850 | | 1,189,866 | |
Net income | | $ | 741,115 | | $ | 1,177,922 | | $ | 3,034,008 | | $ | 3,381,006 | |
| | Three Months Ended | |
| | Sep. 30, 2008 | | Jun. 30, 2008 | | Mar. 31, 2008 | | Dec. 31, 2007 | | Sep. 30, 2007 | |
Interest income | | | | | | | | | | | |
Loans and leases | | $ | 6,905,422 | | $ | 6,860,510 | | $ | 6,887,210 | | $ | 7,344,466 | | $ | 7,345,777 | |
Securities and other | | 1,514,018 | | 1,752,556 | | 1,857,622 | | 1,726,351 | | 1,546,569 | |
| | | | | | | | | | | |
Total interest income | | 8,419,440 | | 8,613,066 | | 8,744,832 | | 9,070,817 | | 8,892,346 | |
| | | | | | | | | | | |
Interest expense | | | | | | | | | | | |
Deposits | | 2,598,805 | | 2,831,400 | | 3,233,736 | | 3,392,598 | | 3,420,693 | |
Borrowings and debt | | 941,488 | | 838,502 | | 964,260 | | 1,108,038 | | 1,049,298 | |
| | | | | | | | | | | |
Total interest expense | | 3,540,293 | | 3,669,902 | | 4,197,996 | | 4,500,636 | | 4,469,991 | |
| | | | | | | | | | | |
Net interest income | | 4,879,147 | | 4,943,164 | | 4,546,836 | | 4,570,181 | | 4,422,355 | |
| | | | | | | | | | | |
Provision (credit) for loan losses | | 130,000 | | 125,000 | | — | | — | | (60,000 | ) |
Other income | | 844,443 | | 1,265,669 | | 1,295,542 | | 1,353,677 | | 1,308,761 | |
Other expenses | | 4,672,654 | | 4,444,540 | | 4,392,749 | | 4,246,993 | | 4,189,171 | |
Provision for income taxes | | 179,821 | | 435,347 | | 360,682 | | 446,299 | | 424,023 | |
Net income | | $ | 741,115 | | $ | 1,203,946 | | $ | 1,088,947 | | $ | 1,230,566 | | $ | 1,177,922 | |
FIDELITY D & D BANCORP, INC.
Selected Financial Ratios and Other Data
| | Three Months Ended | |
| | Sep. 30, 2008 | | Jun. 30, 2008 | | Mar. 31, 2008 | | Dec. 31, 2007 | | Sep. 30, 2007 | |
Selected returns and financial ratios | | | | | | | | | | | |
Diluted earnings per share | | $ | 0.35 | | $ | 0.59 | | $ | 0.52 | | $ | 0.59 | | $ | 0.57 | |
Dividends per share | | $ | 0.25 | | $ | 0.25 | | $ | 0.25 | | $ | 0.25 | | $ | 0.24 | |
Yield on interest-earning assets (FTE) | | 6.17 | % | 6.39 | % | 6.39 | % | 6.56 | % | 6.56 | % |
Cost of interest-bearing liabilities | | 3.07 | % | 3.21 | % | 3.63 | % | 3.88 | % | 3.96 | % |
Net interest spread | | 3.10 | % | 3.18 | % | 2.76 | % | 2.68 | % | 2.60 | % |
Net interest margin | | 3.62 | % | 3.71 | % | 3.37 | % | 3.35 | % | 3.31 | % |
Return on average assets | | 0.50 | % | 0.83 | % | 0.74 | % | 0.83 | % | 0.81 | % |
Return on average equity | | 5.63 | % | 8.73 | % | 7.80 | % | 8.86 | % | 8.80 | % |
Efficiency ratio | | 74.84 | % | 70.17 | % | 73.64 | % | 70.47 | % | 72.05 | % |
Expense ratio | | 2.35 | % | 2.19 | % | 2.10 | % | 1.97 | % | 2.01 | % |
| | Nine Months Ended | |
| | Sep. 30, 2008 | | Sep. 30, 2007 | |
Diluted earnings per share | | $ | 1.46 | | $ | 1.64 | |
Dividends per share | | $ | 0.75 | | $ | 0.68 | |
Yield on interest-earning assets (FTE) | | 6.32 | % | 6.60 | % |
Cost of interest-bearing liabilities | | 3.31 | % | 3.98 | % |
Net interest spread | | 3.01 | % | 2.62 | % |
Net interest margin | | 3.57 | % | 3.34 | % |
Return on average assets | | 0.69 | % | 0.79 | % |
Return on average equity | | 7.42 | % | 8.57 | % |
Efficiency ratio | | 72.86 | % | 72.01 | % |
Expense ratio | | 2.21 | % | 2.02 | % |
Other data
| | Sep. 30, 2008 | | Jun. 30, 2008 | | Mar. 31, 2008 | | Dec. 31, 2007 | | Sep. 30, 2007 | |
Book value per share | | $ | 24.55 | | $ | 25.63 | | $ | 27.08 | | $ | 26.62 | | $ | 26.00 | |
Equity to assets | | 8.89 | % | 8.86 | % | 9.46 | % | 9.40 | % | 9.15 | % |
Allowance for loan losses to: | | | | | | | | | | | |
Total loans | | 0.98 | % | 1.00 | % | 1.10 | % | 1.13 | % | 1.17 | % |
Non-accrual loans | | 1.35 | x | 1.14 | x | 0.97 | x | 1.27 | x | 1.07 | x |
Non-accrual loans to net loans | | 0.73 | % | 0.88 | % | 1.14 | % | 0.90 | % | 1.10 | % |
Non-performing assets to total assets | | 0.90 | % | 0.79 | % | 0.84 | % | 0.67 | % | 0.81 | % |
| | | | | | | | | | | | | | | | |
