0001437749-24-002162.txt : 20240125 0001437749-24-002162.hdr.sgml : 20240125 20240125132603 ACCESSION NUMBER: 0001437749-24-002162 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20240125 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20240125 DATE AS OF CHANGE: 20240125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY D & D BANCORP INC CENTRAL INDEX KEY: 0001098151 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] ORGANIZATION NAME: 02 Finance IRS NUMBER: 233017653 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-38229 FILM NUMBER: 24560840 BUSINESS ADDRESS: STREET 1: BLAKELY & DRINKER STREETS CITY: DUNMORE STATE: PA ZIP: 18512 BUSINESS PHONE: 5703428281 MAIL ADDRESS: STREET 1: BLAKELY & DRINKER STREETS CITY: DUNMORE STATE: PA ZIP: 18512 8-K 1 fdbc20231128_8k.htm FORM 8-K fdbc20231128_8k.htm
false 0001098151 0001098151 2024-01-25 2024-01-25
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
 
FORM 8-K
CURRENT REPORT
 
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
______________
 
Date of Report (Date of earliest event reported): January 25, 2024
 
FIDELITY D & D BANCORP, INC.
(Exact name of registrant as specified in its charter)
 
Pennsylvania
 
001-38229
 
23-3017653
(State or other
jurisdiction of
incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
         
 
   
Blakely and Drinker Streets, Dunmore, PA
18512
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area code: (570) 342-8281
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, no par value
FDBC
The NASDAQ Stock Market, LLC
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 

 
FIDELITY D & D BANCORP, INC.
 
CURRENT REPORT ON FORM 8-K
 
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
On January 24, 2024, Fidelity D & D Bancorp, Inc. issued a press release describing its results of operations for the quarter and year-to-date ended December 31, 2023. A copy of the related press release is being furnished as Exhibit 99.1 to this Form 8-K.
 
The information in this Item 2.02 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.
 
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
 
(d) Exhibits.
   
Exhibit Number
Description
   
99.1
   
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
  FIDELITY D & D BANCORP, INC.
  (Registrant)
   
Date: January 25, 2024
By: /s/ Salvatore R. DeFrancesco, Jr.
 
Salvatore R. DeFrancesco, Jr.
 
Treasurer and Chief Financial Officer
 
 
EX-99.1 2 ex_600667.htm EXHIBIT 99.1 ex_600667.htm

Exhibit 99.1

FIDELITY D & D BANCORP, INC.

FOR IMMEDIATE RELEASE



Date:  January 24, 2024



Contacts:





 

Daniel J. Santaniello

Salvatore R. DeFrancesco, Jr.

President and Chief Executive Officer

Treasurer and Chief Financial Officer

570-504-8035

570-504-8000



FIDELITY D & D BANCORP, INC.

REPORTS 2023 FINANCIAL RESULTS



Dunmore, PA – Fidelity D & D Bancorp, Inc. (NASDAQ: FDBC) and its banking subsidiary, The Fidelity Deposit and Discount Bank, announced its unaudited, consolidated financial results for the three and twelve month periods ended December 31, 2023.



Unaudited Financial Information



Net income recorded for the year ended December 31, 2023 was $18.2 million, or $3.19 diluted earnings per share, compared to $30.0 million, or $5.29 diluted earnings per share, for the year ended December 31, 2022.  The $11.8 million, or 39% decline in net income stemmed from the $10.2 million reduction in net interest income and $5.2 million less non-interest income primarily from losses on the sale of securities partially offset by $3.4 million lower provision for income taxes.

 

During the fourth quarter of 2023, the Company sold certain available-for-sale securities with a carrying value of $35.6 million for a $6.5 million pre-tax loss in order to deleverage the reliance on short-term borrowings in order to reposition the balance sheet. Excluding the loss on the sale of securities of $5.1 million, net of tax, adjusted net income was $23.3 million, or $4.08 adjusted diluted earnings per share, for the year ended December 31, 2023, a $6.7 million decrease compared to 2022. For more detail on adjusted net income which is a non-GAAP measurement, refer to the “Non-GAAP Measures” table within the Selected Financial Ratios and Other Data section.

 

2023 core earnings remained strong as we repositioned the balance sheet to provide flexibility through uncertain economic climates. We continue to execute well,” stated Daniel J. Santaniello, President and Chief Executive Officer. “Our balance sheet and credit quality are strong, and expenses remain well managed. We continue to be focused, disciplined and thoughtful as we execute on our strategic plan. The Fidelity Bankers have demonstrated exemplary efforts and Fidelity Bank is well positioned for the future and committed to our clients, shareholders, and the communities we serve.



Net income for the quarter ended December 31, 2023 was $0.5 million, or $0.08 diluted earnings per share, compared to $7.1 million, or $1.26 diluted earnings per share, for the quarter ended December 31, 2022.  The $6.6 million, or 93%, decline in net income resulted primarily from $5.9 million lower non-interest income due to the $6.5 million loss on the sale of securities during the fourth quarter of 2023. Net interest income declined $3.4 million which was partially offset by a $2.1 million reduction in the provision for income taxes and $0.4 million less in the provision for credit losses on loans. 

 

Excluding the loss on the sale of securities of $5.1 million, net of tax, adjusted net income was $5.6 million, or $0.97 adjusted diluted earnings per share, for the quarter ended December 31, 2023, a $1.5 million decrease compared to the same period in 2022. For more detail on adjusted net income which is a non-GAAP measurement, refer to the “Non-GAAP Measures” table within the Selected Financial Ratios and Other Data section.

 

Consolidated Year-To-Date Operating Results Overview

 

Net interest income was $62.1 million for the year ended December 31, 2023 compared to $72.3 million for the year ended December 31, 2022.  The $10.2 million, or 14%, decline was the result of interest expense growing faster than interest income.  On the asset side, the loan portfolio caused interest income growth by producing $16.6 million more interest income from an increase of 68 basis points in FTE loan yields on $134.5 million in higher average balances. Interest income in the commercial portfolio increased $9.2 million during the year ended December 31, 2023 compared to the same 2022 period, despite recognition of $1.2 million less Small Business Administration ("SBA") fees attributable to Paycheck Protection Program ("PPP") loans over the same time period.  Interest income from investments decreased $1.1 million from the $67.1 million lower average balance in the portfolio. On the funding side, interest expense increased by $25.4 million primarily due to the 144 basis point higher rate paid on interest-bearing deposits. The Company also required $48.8 million more in average short-term borrowings which added $2.3 million in interest expense. FTE net interest spread was 2.25% for 2023, or 91 basis points lower than the 3.16% recorded for 2022.  Over the same time period, the Company’s FTE net interest margin decreased by 47 basis points to 2.81% from 3.28%.



 

 

The provision for credit losses on loans was $1.5 million which was partially offset by a benefit for credit losses on unfunded loan commitments of $0.2 million for 2023. During the first quarter of 2023, the Company adopted Accounting Standard Update 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (CECL). The provision for credit losses on loans and unfunded commitments for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. For the year ended December 31, 2023, the benefit for credit losses on unfunded commitments was due to a reduction in unfunded commitments during the year. For the year ended December 31, 2023, the increase in the allowance for credit losses on loans was due to growth and change in composition of the loan portfolio.

 

Total non-interest income for the year ended December 31, 2023 was $11.4 million, a decrease of $5.2 million, or 31%, from $16.6 million for the year ended December 31, 2022. Non-interest income would have increased $1.3 million if not for the $6.5 million loss on the sale of securities during 2023. In addition, the Company also recorded $0.7 million lower gains on loans sold and $0.3 million less service charges on loans.  Partially offsetting these decreases was $0.5 million in additional trust fiduciary fees, $0.5 million more service charges on deposits, $0.3 million in recoveries from acquired charged-off loans, $0.3 million higher commercial swap fees, $0.3 million in additional mortgage servicing fees and $0.2 million more debit card interchange fees.

 

Non-interest expenses increased to $51.9 million for the year ended December 31, 2023, an increase of $0.5 million, or 1%, from $51.4 million for the year ended December 31, 2022. The largest driver of this increase was a $1.2 million increase in premises and equipment expenses which increased $0.6 million primarily from additional depreciation, equipment maintenance and software subscription related expenses. In addition, the Company incurred $0.5 million more in fraud losses, $0.4 million higher FDIC assessment and a $0.4 million increase in professional service expenses. Partially offsetting these increases, salaries and employee benefits expenses decreased $1.3 million, primarily from less incentive based compensation, and PA shares tax expense declined $0.6 million from a lower capital taxable base.

 

The provision for income taxes decreased $3.4 million during 2023 compared to 2022 due to a $0.5 million increase in tax credits and the lower income before taxes. 

 

Consolidated Fourth Quarter Operating Results Overview



Net interest income was $14.9 million for the fourth quarter of 2023, a 19% decrease over the $18.3 million earned for the fourth quarter of 2022.  The $3.4 million decline in net interest income resulted primarily from the $7.0 million increase in interest expense primarily due to a 156 basis point increase in the rates paid on interest-bearing deposits supplemented by $27.7 million higher average balances of interest-bearing deposits. The Company also required $44.6 million more in average short-term borrowings during the fourth quarter of 2023 which contributed $0.5 million in additional interest expense compared to the fourth quarter of 2022. Partially offsetting the higher interest expense, interest income grew $3.5 million primarily due to a $123.9 million increase in the average balance of loans and leases and a 63 basis point increase in fully-taxable equivalent ("FTE") yields earned thereon, producing $4.0 million higher FTE interest income. Partially offsetting the higher interest income in the loan portfolio, interest income from the investment portfolio declined $0.4 million primarily from the decrease of $79.6 million in the average balance of securities.  

 

The overall cost of interest-bearing liabilities was 2.36% for the fourth quarter of 2023, an increase of 162 basis points from the 0.74% paid for the fourth quarter of 2022.  The cost of funds increased 126 basis points to 1.79% for the fourth quarter of 2023 from 0.53% for the fourth quarter of 2022. The Company’s FTE (non-GAAP measurement) net interest spread was 2.00% for the fourth quarter of 2023, down 104 basis points from the 3.04% recorded for the fourth quarter of 2022.  FTE net interest margin decreased by 61 basis points to 2.66% for the three months ended December 31, 2023 from 3.27% for the same 2022 period due to the increase in rates paid on interest-bearing liabilities growing at a faster pace than the yields on interest-earning assets. Average non-interest bearing deposits, which impact net interest margin, decreased $75.6 million quarter-over-quarter resulting in the widening gap between spread and margin.



The provision for credit losses on loans was $0.1 million partially offset by a net benefit in the provision for credit losses on unfunded loan commitments of $0.1 million for the fourth quarter of 2023. For the three months ended December 31, 2023, the increase in the provision for credit losses on loans was due to growth and change in composition of the loan portfolio. For the three months ended December 31, 2023, the $0.1 million benefit for credit losses on unfunded commitments was due to a reduction in unfunded commitments during the quarter.



Total non-interest income decreased $5.9 million due to the $6.5 million loss recognized on the sale of securities during the fourth quarter of 2023. Partially offsetting this decrease was the $0.3 million increase in wealth management revenue, $0.1 million in mortgage servicing fees and $0.1 million higher service charges on deposits.



Non-interest expenses remained relatively unchanged for the fourth quarter of 2023 compared to the same quarter of 2022.  Increases of $0.2 million in premises and equipment expenses and $0.2 million in fraud losses were partially offset by decreases of $0.2 million in professional services. 



The provision for income taxes decreased $2.1 million during the fourth quarter of 2023 primarily due to the lower level of operating income compared to the fourth quarter of 2022.  

 

Consolidated Balance Sheet & Asset Quality Overview



The Company’s total assets grew to $2.5 billion as of December 31, 2023, an increase of $125 million from December 31, 2022.  Growth in the loan portfolio of $121 million and $83 million in cash and cash equivalents was partially offset by a reduction of the investment portfolio by $75 million. The decline in the investment portfolio was primarily due to sales of $67 million in securities and $25 million in paydowns partially offset by a $16 million increase in market value of available-for-sale securities. Also noteworthy during 2023, the market value of held-to-maturity securities increased by $10 million, with $27 million in unrealized losses at December 31, 2023. During the same time period, total liabilities increased $98 million, or 4%.  Growth of $104 million in short-term borrowings replaced deposit declines of $8 million with the remaining balance used to fund loan growth with the excess increasing cash balances. Transactional deposit mix changed with overall balances down primarily from customers' investing part of their funds in higher yields and increased consumer spending. This reduction was partially mitigated through the $96 million growth achieved by promotional CD offerings during 2023. As of December 31, 2023, the ratio of insured and collateralized deposits to total deposits was approximately 77%.

 

 

 

Shareholders’ equity increased $26.5 million, or 16%, to $189.5 million at December 31, 2023 from $163.0 million at December 31, 2022. The increase was caused by a $14.7 million, after tax, improvement in accumulated other comprehensive income from lower net unrealized losses recorded on available-for-sale investment securities plus retained earnings increase from net income of $18.2 million, partially offset by $8.4 million in cash dividends paid to shareholders. An additional $3.3 million was recorded from the issuance of common stock under the Company’s stock plans and stock-based compensation expense. Partially offsetting these increases was a cumulative-effect adjustment made for adoption of ASU 2016-13 during the first quarter of 2023 which reduced retained earnings by $1.3 million. At December 31, 2023, there were no credit losses on available-for-sale and held-to-maturity debt securities.  Accumulated other comprehensive income (loss) is excluded from regulatory capital ratios. The Company remains well capitalized with Tier 1 capital at 9.15% of total average assets as of December 31, 2023.  Total risk-based capital was 14.67% of risk-weighted assets and Tier 1 risk-based capital was 13.42% of risk-weighted assets as of December 31, 2023.  Tangible book value per share was $29.57 at December 31, 2023 compared to $25.18 at December 31, 2022.  Tangible common equity was 6.79% of total assets at December 31, 2023 compared to 6.01% at December 31, 2022.



Asset Quality



Total non-performing assets were $3.3 million, or 0.13% of total assets, at December 31, 2023, compared to $2.7 million, or 0.12% of total assets, at December 31, 2022. Past due and non-accrual loans to total loans were 0.46% at December 31, 2023 compared to 0.28% at December 31, 2022. Net charge-offs to average total loans were 0.04% at December 31, 2023 compared to 0.04% at December 31, 2022.

 

About Fidelity D & D Bancorp, Inc. and The Fidelity Deposit and Discount Bank

 

Fidelity D & D Bancorp, Inc. has built a strong history as trusted financial advisor to the clients served by The Fidelity Deposit and Discount Bank (“Fidelity Bank”).  Fidelity Bank continues its mission of exceeding client expectations through a unique banking experience. It operates 21 full-service offices throughout Lackawanna, Luzerne, Lehigh and Northampton Counties and a Fidelity Bank Wealth Management Office in Schuylkill County. Fidelity Bank provides a digital banking experience online at www.bankatfidelity.com, through the Fidelity Mobile Banking app, and in the Client Care Center at 1-800-388-4380. Additionally, the Bank offers full-service Wealth Management & Brokerage Services, a Mortgage Center, and a full suite of personal and commercial banking products and services. Part of the Company’s vision is to serve as the best bank for the community, which was accomplished by having provided over 5,980 hours of volunteer time and over $1.4 million in donations to non-profit organizations directly within the markets served throughout 2023. Fidelity Bank's deposits are insured by the Federal Deposit Insurance Corporation up to the full extent permitted by law.

 

 

 

Non-GAAP Financial Measures

 

 The Company uses non-GAAP financial measures to provide information useful to the reader in understanding its operating performance and trends, and to facilitate comparisons with the performance of other financial institutions. Management uses these measures internally to assess and better understand our underlying business performance and trends related to core business activities.  The Company’s non-GAAP financial measures and key performance indicators may differ from the non-GAAP financial measures and key performance indicators other financial institutions use to measure their performance and trends. Non-GAAP financial measures should be supplemental to GAAP used to prepare the Company’s operating results and should not be read in isolation or relied upon as a substitute for GAAP measures.  Reconciliations of non-GAAP financial measures to GAAP are presented in the tables below.

 

 Interest income was adjusted to recognize the income from tax exempt interest-earning assets as if the interest was taxable, fully-taxable equivalent (FTE), in order to calculate certain ratios within this document.  This treatment allows a uniform comparison among yields on interest-earning assets.  Interest income was FTE adjusted, using the corporate federal tax rate of 21% for 2023 and 2022.



Forward-looking statements

 

Certain of the matters discussed in this press release 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:

 

  local, regional and national economic conditions and changes thereto;
  the short-term and long-term effects of inflation, and rising costs to the Company, its customers and on the economy;
  the risks of changes and volatility of 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;
  securities markets and monetary fluctuations and volatility;
  disruption of credit and equity markets;
  impacts of the 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 costs and effects of litigation and of unexpected or adverse outcomes in such litigation;
  the impact of new or changes in existing laws and regulations, including laws and regulations concerning taxes, banking, securities and insurance and their application with which the Company and its subsidiaries must comply;

 

 

 

 

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 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;
 

■ 

the effects of economic conditions of any pandemic, epidemic or other health-related crisis such as COVID-19 and responses thereto on current customers and the operations of the Company, specifically the effect of the economy on loan customers’ ability to repay loans;
 

■ 

the effects of bank failures, banking system instability, deposit fluctuations, loan and securities value changes;
 

■ 

technological changes;
 

■ 

the interruption or breach in security of our information systems, continually evolving cybersecurity and other technological risks and attacks resulting in failures or disruptions in customer account management, general ledger processing and loan or deposit updates and potential impacts resulting therefrom including additional costs, reputational damage, regulatory penalties, and financial losses;
 

■ 

acquisitions and integration of acquired businesses;

 

■ 

the failure of assumptions underlying the establishment of reserves for loan losses and estimations of values of collateral and various financial assets and liabilities;
 

■ 

acts of war or terrorism; and
 

■ 

the risk that our analyses of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful.

 

The Company cautions readers not to place undue reliance on forward-looking statements, which reflect analyses only as of the date of this release.  The Company has no obligation to update any forward-looking statements to reflect events or circumstances after the date of this release.

 

For more information please visit our investor relations web site located through www.bankatfidelity.com.

 

 

 

FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Balance Sheets

(dollars in thousands)



At Period End:

 

December 31, 2023

   

December 31, 2022

 

Assets

               

Cash and cash equivalents

  $ 111,949     $ 29,091  

Investment securities

    568,273       643,606  

Restricted investments in bank stock

    3,905       5,268  

Loans and leases

    1,686,555       1,565,811  

Allowance for credit losses on loans

    (18,806 )     (17,149 )

Premises and equipment, net

    34,232       31,307  

Life insurance cash surrender value

    54,572       54,035  

Goodwill and core deposit intangible

    20,812       21,168  

Other assets

    41,667       45,235  
                 

Total assets

  $ 2,503,159     $ 2,378,372  
                 

Liabilities

               

Non-interest-bearing deposits

  $ 536,143     $ 602,608  

Interest-bearing deposits

    1,622,282       1,564,305  

Total deposits

    2,158,425       2,166,913  

Short-term borrowings

    117,000       12,940  

Secured borrowings

    7,372       7,619  

Other liabilities

    30,883       27,950  

Total liabilities

    2,313,680       2,215,422  
                 

Shareholders' equity

    189,479       162,950  
                 

Total liabilities and shareholders' equity

  $ 2,503,159     $ 2,378,372  

 

 

Average Year-To-Date Balances:

 

December 31, 2023

   

December 31, 2022

 

Assets

               

Cash and cash equivalents

  $ 35,462     $ 81,532  

Investment securities

    597,359       684,588  

Restricted investments in bank stock

    4,212       3,565  

Loans and leases

    1,635,286       1,500,796  

Allowance for credit losses on loans

    (18,680 )     (16,612 )

Premises and equipment, net

    32,215       30,640  

Life insurance cash surrender value

    54,085       53,443  

Goodwill and core deposit intangible

    20,977       21,359  

Other assets

    44,180       40,265  
                 

Total assets

  $ 2,405,096     $ 2,399,576  
                 

Liabilities

               

Non-interest-bearing deposits

  $ 558,962     $ 594,541  

Interest-bearing deposits

    1,586,527       1,593,805  

Total deposits

    2,145,489       2,188,346  

Short-term borrowings

    49,860       1,031  

Secured borrowings

    7,489       8,886  

Other liabilities

    29,881       28,434  

Total liabilities

    2,232,719       2,226,697  
                 

Shareholders' equity

    172,377       172,879  
                 

Total liabilities and shareholders' equity

  $ 2,405,096     $ 2,399,576  



 

 

-FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Statements of Income

(dollars in thousands)



   

Three Months Ended

   

Twelve Months Ended

 
   

Dec. 31, 2023

   

Dec. 31, 2022

   

Dec. 31, 2023

   

Dec. 31, 2022

 

Interest income

                               

Loans and leases

  $ 21,407     $ 17,425     $ 80,629     $ 64,020  

Securities and other

    3,434       3,869       13,206       14,652  
                                 

Total interest income

    24,840       21,294       93,835       78,672  
                                 

Interest expense

                               

Deposits

    (9,232 )     (2,822 )     (28,945 )     (6,144 )

Borrowings and debt

    (707 )     (145 )     (2,843 )     (254 )
                                 

Total interest expense

    (9,939 )     (2,967 )     (31,788 )     (6,398 )
                                 

Net interest income

    14,901       18,327       62,047       72,274  
                                 

Provision for credit losses on loans

    (111 )     (525 )     (1,491 )     (2,100 )

Net benefit (provision) for credit losses on unfunded loan commitments

    65       (11 )     165       13  

Non-interest income (loss)

    (1,944 )     3,920       11,405       16,642  

Non-interest expense

    (12,804 )     (12,854 )     (51,870 )     (51,361 )
                                 

Income before income taxes

    107       8,857       20,256       35,468  
                                 

(Provision) benefit for income taxes

    361       (1,711 )     (2,046 )     (5,447 )

Net income

  $ 468     $ 7,146     $ 18,210     $ 30,021  

 

 

   

Three Months Ended

 
   

Dec. 31, 2023

   

Sep. 30, 2023

   

Jun. 30, 2023

   

Mar. 31, 2023

   

Dec. 31, 2022

 

Interest income

                                       

Loans and leases

  $ 21,407     $ 20,502     $ 19,703     $ 19,018     $ 17,425  

Securities and other

    3,434       3,176       3,276       3,320       3,869  
                                         

Total interest income

    24,840       23,678       22,979       22,338       21,294  
                                         

Interest expense

                                       

Deposits

    (9,232 )     (8,488 )     (6,607 )     (4,618 )     (2,822 )

Borrowings and debt

    (707 )     (551 )     (890 )     (695 )     (145 )
                                         

Total interest expense

    (9,939 )     (9,039 )     (7,497 )     (5,313 )     (2,967 )
                                         

Net interest income

    14,901       14,639       15,482       17,025       18,327  
                                         

Provision for credit losses on loans

    (111 )     (525 )     (675 )     (180 )     (525 )

Net benefit (provision) for credit losses on unfunded loan commitments

    65       275       50       (225 )     (11 )

Non-interest income (loss)

    (1,944 )     4,325       4,535       4,489       3,920  

Non-interest expense

    (12,804 )     (12,784 )     (13,425 )     (12,857 )     (12,854 )
                                         

Income before income taxes

    107       5,930       5,967       8,252       8,857  
                                         

(Provision) benefit for income taxes

    361       (590 )     (605 )     (1,212 )     (1,711 )

Net income

  $ 468     $ 5,340     $ 5,362     $ 7,040     $ 7,146  

 

 



FIDELITY D & D BANCORP, INC.

Unaudited Condensed Consolidated Balance Sheets

(dollars in thousands)

 

At Period End:

 

Dec. 31, 2023

   

Sep. 30, 2023

   

Jun. 30, 2023

   

Mar. 31, 2023

   

Dec. 31, 2022

 

Assets

                                       

Cash and cash equivalents

  $ 111,949     $ 110,471     $ 69,632     $ 63,038     $ 29,091  

Investment securities

    568,273       576,688       604,264       614,526       643,606  

Restricted investments in bank stock

    3,905       3,800       3,728       5,968       5,268  

Loans and leases

    1,686,555       1,647,552       1,631,472       1,627,155       1,565,811  

Allowance for credit losses on loans

    (18,806 )     (18,757 )     (18,350 )     (17,910 )     (17,149 )

Premises and equipment, net

    34,232       32,625       31,329       31,408       31,307  

Life insurance cash surrender value

    54,572       54,226       53,892       53,567       54,035  

Goodwill and core deposit intangible

    20,812       20,897       20,981       21,071       21,168  

Other assets

    41,667       49,318       44,284       44,198       45,235  
                                         

Total assets

  $ 2,503,159     $ 2,476,820     $ 2,441,232     $ 2,443,021     $ 2,378,372  
                                         

Liabilities

                                       

Non-interest-bearing deposits

  $ 536,143     $ 549,741     $ 582,473     $ 591,055     $ 602,608  

Interest-bearing deposits

    1,622,282       1,602,018       1,569,519       1,552,036       1,564,305  

Total deposits

    2,158,425       2,151,759       2,151,992       2,143,091       2,166,913  

Short-term borrowings

    117,000       124,000       76,111       88,989       12,940  

Secured borrowings

    7,372       7,439       7,498       7,560       7,619  

Other liabilities

    30,883       28,190       27,887       27,494       27,950  

Total liabilities

    2,313,680       2,311,388       2,263,488       2,267,134       2,215,422  
                                         

Shareholders' equity

    189,479       165,432       177,744       175,887       162,950  
                                         

Total liabilities and shareholders' equity

  $ 2,503,159     $ 2,476,820     $ 2,441,232     $ 2,443,021     $ 2,378,372  

 

 

Average Quarterly Balances:

 

Dec. 31, 2023

   

Sep. 30, 2023

   

Jun. 30, 2023

   

Mar. 31, 2023

   

Dec. 31, 2022

 

Assets

                                       

Cash and cash equivalents

  $ 42,176     $ 33,238     $ 37,125     $ 29,192     $ 73,023  

Investment securities

    558,423       598,604       610,009       623,097       637,825  

Restricted investments in bank stock

    3,854       3,763       3,834       5,418       3,840  

Loans and leases

    1,664,905       1,640,411       1,625,509       1,609,655       1,540,999  

Allowance for credit losses on loans

    (19,222 )     (18,812 )     (18,296 )     (18,380 )     (17,113 )

Premises and equipment, net

    33,629       31,746       31,989       31,477       31,190  

Life insurance cash surrender value

    54,449       54,110       53,782       53,995       53,925  

Goodwill and core deposit intangible

    20,844       20,930       21,018       21,120       21,210  

Other assets

    46,028       44,346       42,630       43,690       47,715  
                                         

Total assets

  $ 2,405,086     $ 2,408,336     $ 2,407,600     $ 2,399,264     $ 2,392,614  
                                         

Liabilities

                                       

Non-interest-bearing deposits

  $ 533,663     $ 548,682     $ 568,202     $ 585,987     $ 609,262  

Interest-bearing deposits

    1,616,826       1,607,793       1,561,412       1,559,212       1,589,129  

Total deposits

    2,150,489       2,156,475       2,129,614       2,145,199       2,198,391  

Short-term borrowings

    48,490       37,595       64,558       48,937       3,875  

Secured borrowings

    7,412       7,470       7,529       7,548       7,654  

Other liabilities

    30,745       29,638       29,479       29,651       30,489  

Total liabilities

    2,237,136       2,231,178       2,231,180       2,231,335       2,240,409  
                                         

Shareholders' equity

    167,950       177,158       176,420       167,929       152,205  
                                         

Total liabilities and shareholders' equity

  $ 2,405,086     $ 2,408,336     $ 2,407,600     $ 2,399,264     $ 2,392,614  

 

 



FIDELITY D & D BANCORP, INC.

Selected Financial Ratios and Other Financial Data



   

Three Months Ended

 
   

Dec. 31, 2023

   

Sep. 30, 2023

   

Jun. 30, 2023

   

Mar. 31, 2023

   

Dec. 31, 2022

 

Selected returns and financial ratios

                                       

Basic earnings per share

  $ 0.08     $ 0.94     $ 0.95     $ 1.25     $ 1.27  

Diluted earnings per share

  $ 0.08     $ 0.93     $ 0.94     $ 1.24     $ 1.26  

Dividends per share

  $ 0.38     $ 0.36     $ 0.36     $ 0.36     $ 0.36  

Yield on interest-earning assets (FTE)*

    4.36 %     4.18 %     4.12 %     4.06 %     3.78 %

Cost of interest-bearing liabilities

    2.36 %     2.17 %     1.84 %     1.33 %     0.74 %

Cost of funds

    1.79 %     1.63 %     1.37 %     0.98 %     0.53 %

Net interest spread (FTE)*

    2.00 %     2.01 %     2.28 %     2.73 %     3.04 %

Net interest margin (FTE)*

    2.66 %     2.63 %     2.82 %     3.13 %     3.27 %

Return on average assets

    0.08 %     0.88 %     0.89 %     1.19 %     1.18 %

Pre-provision net revenue to average assets*

    0.03 %     1.02 %     1.10 %     1.46 %     1.56 %

Return on average equity

    1.10 %     11.96 %     12.19 %     17.00 %     18.63 %

Return on average tangible equity*

    1.26 %     13.56 %     13.84 %     19.45 %     21.64 %

Efficiency ratio (FTE)*

    63.74 %     65.01 %     64.72 %     57.72 %     56.02 %

Expense ratio

    2.43 %     1.39 %     1.48 %     1.41 %     1.48 %



 

   

Years ended

 
   

Dec. 31, 2023

   

Dec. 31, 2022

 

Basic earnings per share

  $ 3.21     $ 5.32  

Diluted earnings per share

  $ 3.19     $ 5.29  

Dividends per share

  $ 1.46     $ 1.35  

Yield on interest-earning assets (FTE)*

    4.18 %     3.56 %

Cost of interest-bearing liabilities

    1.93 %     0.40 %

Cost of funds

    1.44 %     0.29 %

Net interest spread (FTE)*

    2.25 %     3.16 %

Net interest margin (FTE)*

    2.81 %     3.28 %

Return on average assets

    0.76 %     1.25 %

Pre-provision net revenue to average assets*

    0.90 %     1.57 %

Return on average equity

    10.56 %     17.37 %

Return on average tangible equity*

    12.03 %     19.81 %

Efficiency ratio (FTE)*

    62.67 %     56.02 %

Expense ratio

    1.69 %     1.45 %



 

 

FIDELITY D & D BANCORP, INC.

Selected Financial Ratios and Other Financial Data

 

Non-GAAP Measures

 

Three Months Ended

   

Twelve Months Ended

 

(dollars in thousands except per share data)

 

Dec. 31, 2023

   

Dec. 31, 2022

   

Dec. 31, 2023

   

Dec. 31, 2022

 

Net income

  $ 468     $ 7,146     $ 18,210     $ 30,021  

Loss (gain) on the sale of available-for-sale debt securities, net of income taxes

    5,109       -       5,110       (3 )

Adjusted net income*

  $ 5,577     $ 7,146     $ 23,320     $ 30,018  

Adjusted basic earnings per share*

  $ 0.98     $ 1.27     $ 4.11     $ 5.32  

Adjusted diluted earnings per share*

  $ 0.97     $ 1.26     $ 4.08     $ 5.29  

Adjusted return on average assets*

    0.92 %     1.18 %     0.97 %     1.25 %

Adjusted return on average tangible equity*

    15.04 %     21.64 %     15.40 %     19.81 %



Other financial data

 

At period end:

 

(dollars in thousands except per share data)

 

Dec. 31, 2023

   

Sep. 30, 2023

   

Jun. 30, 2023

   

Mar. 31, 2023

   

Dec. 31, 2022

 

Assets under management

  $ 876,287     $ 799,968     $ 840,068     $ 809,897     $ 736,401  

Book value per share

  $ 33.22     $ 29.04     $ 31.29     $ 31.05     $ 28.94  

Tangible book value per share*

  $ 29.57     $ 25.37     $ 27.59     $ 27.33     $ 25.18  

Equity to assets

    7.57 %     6.68 %     7.28 %     7.20 %     6.85 %

Tangible common equity ratio*

    6.79 %     5.89 %     6.48 %     6.39 %     6.01 %

Allowance for credit losses on loans to:

                                       

Total loans

    1.12 %     1.14 %     1.13 %     1.10 %     1.10 %

Non-accrual loans

 

5.68x

   

6.24x

   

5.25x

   

5.36x

   

6.77x

 

Non-accrual loans to total loans

    0.20 %     0.18 %     0.21 %     0.21 %     0.16 %

Non-performing assets to total assets**

    0.13 %     0.14 %     0.15 %     0.14 %     0.17 %

Net charge-offs to average total loans

    0.04 %     0.04 %     0.05 %     0.04 %     0.04 %
                                         

Capital Adequacy Ratios

                                       

Total risk-based capital ratio

    14.67 %     14.76 %     14.71 %     14.59 %     14.35 %

Common equity tier 1 risk-based capital ratio

    13.42 %     13.58 %     13.52 %     13.42 %     13.27 %

Tier 1 risk-based capital ratio

    13.42 %     13.58 %     13.52 %     13.42 %     13.27 %

Leverage ratio

    9.15 %     9.22 %     9.08 %     8.92 %     8.69 %

* Non-GAAP Financial Measures - see reconciliations below

**Note that based on the Company’s adoption of ASU 2022-02, Financial Instruments-Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures, the recognition and measurement guidance related to troubled debt restructurings (TDR) has been eliminated. As such, TDRs were removed from non-performing assets for the current reporting period to adhere to this standard. Prior periods included accruing TDRs in non-performing assets.

 

 

 

 

FIDELITY D & D BANCORP, INC.

Reconciliations of Non-GAAP Financial Measures to GAAP

 

 

Reconciliations of Non-GAAP Measures to GAAP

 

Three Months Ended

 

(dollars in thousands)

 

Dec. 31, 2023

   

Sep. 30, 2023

   

Jun. 30, 2023

   

Mar. 31, 2023

   

Dec. 31, 2022

 

FTE net interest income (non-GAAP)

                                       

Interest income (GAAP)

  $ 24,840     $ 23,678     $ 22,979     $ 22,338     $ 21,294  

Adjustment to FTE

    664       700       725       760       700  

Interest income adjusted to FTE (non-GAAP)

    25,504       24,378       23,704       23,098       21,994  

Interest expense (GAAP)

    9,939       9,039       7,497       5,313       2,967  

Net interest income adjusted to FTE (non-GAAP)

  $ 15,565       15,339       16,207       17,785       19,027  
                                         

Efficiency Ratio (non-GAAP)

                                       

Non-interest expenses (GAAP)

  $ 12,804     $ 12,784     $ 13,425     $ 12,857     $ 12,854  
                                         

Net interest income (GAAP)

    14,901       14,639       15,482       17,025       18,327  

Plus: taxable equivalent adjustment

    664       700       725       760       700  

Non-interest income (GAAP)

    (1,944 )     4,325       4,535       4,489       3,920  

Less: (Loss) gain on sales of securities

    (6,467 )     -       -       (1 )     -  

Net interest income (FTE) plus adjusted non-interest income (non-GAAP)

  $ 20,089     $ 19,664     $ 20,742     $ 22,275     $ 22,947  

Efficiency ratio (non-GAAP) (1)

    63.74 %     65.01 %     64.72 %     57.72 %     56.02 %

(1) The reported efficiency ratio is a non-GAAP measure calculated by dividing non-interest expense by the sum of net interest income, on an FTE basis, and adjusted non-interest (loss) income.

                                       
                                         

Tangible Book Value per Share/Tangible Common Equity Ratio (non-GAAP)

                                       

Total assets (GAAP)

  $ 2,503,159     $ 2,476,820     $ 2,441,232     $ 2,443,021     $ 2,378,372  

Less: Intangible assets, primarily goodwill

    (20,812 )     (20,897 )     (20,981 )     (21,071 )     (21,167 )

Tangible assets

    2,482,347       2,455,923       2,420,251       2,421,950       2,357,205  

Total shareholders' equity (GAAP)

    189,479       165,432       177,744       175,887       162,950  

Less: Intangible assets, primarily goodwill

    (20,812 )     (20,897 )     (20,981 )     (21,071 )     (21,167 )

Tangible common equity

    168,667       144,535       156,763       154,816       141,783  
                                         

Common shares outstanding, end of period

    5,703,636       5,696,351       5,681,260       5,665,255       5,630,794  

Tangible Common Book Value per Share

  $ 29.57     $ 25.37     $ 27.59     $ 27.33     $ 25.18  

Tangible Common Equity Ratio

    6.79 %     5.89 %     6.48 %     6.39 %     6.01 %
                                         

Pre-Provision Net Revenue to Average Assets

                                       

Income before taxes (GAAP)

  $ 107     $ 5,930     $ 5,967     $ 8,252     $ 8,857  

Plus: Provision for credit losses

    47       250       625       405       536  

Total pre-provision net revenue (non-GAAP)

    154       6,180       6,592       8,657       9,393  

Total (annualized) (non-GAAP)

  $ 609     $ 24,517     $ 26,440     $ 35,110     $ 37,267  
                                         

Average assets

  $ 2,405,086     $ 2,408,336     $ 2,407,600     $ 2,399,264     $ 2,392,614  

Pre-Provision Net Revenue to Average Assets (non-GAAP)

    0.03 %     1.02 %     1.10 %     1.46 %     1.56 %

 

 

 

 

FIDELITY D & D BANCORP, INC.

Reconciliations of Non-GAAP Financial Measures to GAAP

 

Reconciliations of Non-GAAP Measures to GAAP

 

Years ended

 

(dollars in thousands)

 

Dec. 31, 2023

   

Dec. 31, 2022

 

FTE net interest income (non-GAAP)

               

Interest income (GAAP)

  $ 93,835     $ 78,672  

Adjustment to FTE

    2,850       2,738  

Interest income adjusted to FTE (non-GAAP)

    96,685       81,410  

Interest expense (GAAP)

    31,788       6,398  

Net interest income adjusted to FTE (non-GAAP)

  $ 64,897       75,012  
                 

Efficiency Ratio (non-GAAP)

               

Non-interest expenses (GAAP)

  $ 51,870     $ 51,361  
                 

Net interest income (GAAP)

    62,047       72,274  

Plus: taxable equivalent adjustment

    2,850       2,738  

Non-interest income (GAAP)

    11,405       16,642  

Less: (Loss) gain on sales of securities

    (6,468 )     4  

Net interest income (FTE) plus non-interest income (non-GAAP)

  $ 82,770     $ 91,650  

Efficiency ratio (non-GAAP) (1)

    62.67 %     56.04 %

(1) The reported efficiency ratio is a non-GAAP measure calculated by dividing non-interest expense by the sum of net interest income, on an FTE basis, and adjusted non-interest (loss) income.

               
                 

Pre-Provision Net Revenue to Average Assets

               

Income before taxes (GAAP)

  $ 20,256     $ 35,468  

Plus: Provision for credit losses

    1,327       2,087  

Total pre-provision net revenue (non-GAAP)

  $ 21,583     $ 37,555  
                 

Average assets

  $ 2,405,096     $ 2,401,922  

Pre-Provision Net Revenue to Average Assets (non-GAAP)

    0.90 %     1.56 %
 
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