INVESTOR RELATIONS

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FDD Bancorp

LCB Bancorp

Contacts:

Daniel J. Santaniello
President and CEO
Fidelity D & D Bancorp, Inc.
570-504-8035

Santo A. Insalaco
Chairman of the Board
Landmark Bancorp, Inc.
570-602-4522

FOR IMMEDIATE RELEASE

FIDELITY D & D BANCORP, INC. TO ACQUIRE LANDMARK BANCORP, INC.

 

DUNMORE, PA, February 26, 2021 – Fidelity D & D Bancorp, Inc. (NASDAQ: FDBC) (“Fidelity”), the parent bank holding company of The Fidelity Deposit and Discount Bank (“Fidelity Bank”), a Pennsylvania state-chartered, FDIC insured bank and trust company headquartered in Dunmore, PA, announced today the execution of a definitive agreement whereby Landmark Bancorp, Inc. (OTCPink: LDKB) (“Landmark”) will be merged with and into a Fidelity acquisition subsidiary and, as soon as possible thereafter, Landmark Community Bank, Landmark’s wholly-owned subsidiary bank, will merge with and into Fidelity Bank. One director from Landmark will join the boards of Fidelity and Fidelity Bank, respectively.

Daniel J. Santaniello, Fidelity President and Chief Executive Officer, stated, “We are excited to welcome Landmark’s clients, shareholders, and bankers to the Fidelity family. Since its founding, Landmark has demonstrated methodical growth and developed a solid reputation in the community. The addition of Landmark provides continued momentum in the execution on our strategic plan and reinforces our position of strength in the local market. We believe that Landmark clients will benefit from the Fidelity Bank relationship banking model focusing on providing trusted financial advice that will enhance the product and service offerings to our combined customers.”

Based on the financial results as of December 31, 2020, the combined company would have pro forma total assets of approximately $2.05 billion, total deposits of approximately $1.8 billion, and loans of approximately $1.4 billion.

Once the merger is complete, Fidelity will have 25 retail community banking offices in Northeast and Eastern Pennsylvania, offering a complete range of consumer and business products, including wealth management.  Its Customer Care Center is open 7 days a week for the convenience of its clients.  Additionally, Fidelity Bank offers the ability for its clients to apply for consumer deposits, real estate loans, and personal loans through its robust online application processes.

Landmark shareholders will receive 0.272 shares of Fidelity common stock and $3.26 in cash for each share of Landmark common stock that they own as of the closing date.

Based on Fidelity’s 10-day average closing price at February 25, 2021 of $55.00, the transaction is valued at $43.4 million or $18.22 per share. The transaction is intended to qualify as a tax-free reorganization for federal income tax purposes.

As of December 31, 2020, Landmark had total assets of $354 million, total deposits of $287 million and totalloans of $280 million. Speaking on behalf of Landmark, Santo A. Insalaco, Chairman of the Board, said, “Partnering with Fidelity reflects our long-term commitment to the local community and our customers. We believe our customers will benefit from the trusted, well-respected and experienced community bankers at Fidelity, and we look forward to working together.”

The transaction has been unanimously approved by the boards of directors of both companies. It is subject to Landmark shareholder approval, regulatory approvals and other customary closing conditions. Currently, the transaction is expected to close early in the third quarter of 2021.

Bybel Rutledge LLP is serving as legal counsel, Commonwealth Advisors, Inc. is serving as financial advisor and Janney Montgomery Scott LLC provided a fairness opinion to Fidelity D & D Bancorp, Inc. Pillar Aught LLC is serving as legal counsel and PNC FIG Advisory, part of PNC Capital Markets, LLC is serving as financial advisor to Landmark Bancorp, Inc.

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About Fidelity D & D Bancorp, Inc.

 

Fidelity D & D Bancorp, Inc. and its wholly owned subsidiary, The Fidelity Deposit and Discount Bank have built a strong history as trusted financial advisors to the clients served by Fidelity Bank, which has built a strong history as a locally owned and operated community bank. Serving the individuals, families, and businesses for over 118 years within Lackawanna and Luzerne Counties and the Lehigh Valley, there are 20 branch offices along with Fidelity Bank Wealth Management offices in Schuylkill County. A full-service, 24-hour, 7 day a week Customer Care Center serves as a virtual branch, accepting and assisting those clients who prefer to open accounts and transact business via telephone, chat or online. Additionally, Fidelity Bank offers full-service Trust & Investment Departments, a Mortgage Center, and an array of personal and business banking products and services.

 

Fidelity Bank has been recognized nationally for its sound financial performance, and superior customer experience. It has been identified as one of the Top 200 Community Banks in the country by American Banker for six years in a row, and Forbes ranked it one of the Best In-State Banks for the past two years. The company has been the #1 mortgage lender in the Lackawanna County market for over 8 years. Fidelity Bank is passionate about success and committed to building strong relationships through superior service. Fidelity Bank’s deposits are insured by the Federal Deposit Insurance Corporation up to the full extent permitted by law.

 

About Landmark Bancorp, Inc.

 

Landmark Bancorp, Inc. is a one-bank holding company organized under the laws of the Commonwealth of Pennsylvania and is headquartered in Pittston, PA. Its wholly-owned subsidiary, Landmark Community Bank, is an independent community bank chartered under the laws of the Commonwealth of Pennsylvania. Landmark Community Bank conducts full-service commercial banking services through five bank centers located in Luzerne and Lackawanna Counties, PA.

 

Caution Regarding Forward-Looking Statements

 

The information presented herein contains forward-looking statements. These forward-looking statements include, but are not limited to, statements about (i) the benefits of the proposed merger between Fidelity and Landmark, (ii) Fidelity’s and Landmark’s plans, obligations, expectations and intentions, and (iii) other statements presented herein that are not historical facts. Words such as “anticipates”, “believes”, “intends”, “should”, “expects”, “will” and variations of similar expressions are intended to identify forward-looking statements. These statements are based on the beliefs of the respective managements of Fidelity and Landmark as to the expected outcome of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, and degree of occurrence. Results and outcomes may differ materially from what may be expressed or forecasted in forward-looking statements. Factors that could cause results and outcomes to differ materially include, among others, the ability to obtain required regulatory and shareholder approvals and meet other closing conditions to the transaction; the ability to complete the merger as expected and within the expected timeframe; disruptions to customer and employee relationships and business operations caused by the merger; the ability to implement integration plans associated with the transaction, which integration may be more difficult, time-consuming or costly than expected; the ability to achieve the cost savings and synergies contemplated by the merger within the expected timeframe, or at all; changes in local and national economies, or market conditions; changes in interest rates; regulations and accounting principles; changes in policies or guidelines; loan demand and asset quality, including real estate values and collateral values; deposit flow; the impact of competition from traditional or new sources; and, the other factors detailed in Fidelity’s publicly filed documents, including its Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent filings with the SEC. Fidelity and Landmark assume no obligation to revise, update or clarify forward-looking statements to reflect events or conditions after the date hereof.

 

No Offer or Solicitation

 

The information presented herein does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

 

Additional Information about the Merger and Where to Find It

 

In connection with the proposed merger, Fidelity will file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 with respect to the offering of Fidelity common stock as the merger consideration under the Securities Act of 1933, as amended, which will include a proxy statement of Landmark and a prospectus of Fidelity. A definitive proxy statement/prospectus will be sent to the shareholders of Landmark seeking the required shareholder approval. Before making any voting or investment decision, investors and security holders are urged to read the registration statement and proxy statement/prospectus and other relevant documents when they become available because they will contain important information about Fidelity, Landmark, and the merger.

 

Investors and security holders will be able to obtain free copies of these documents through the website maintained by the SEC at http://www.sec.gov. Investors and security holders may also obtain free copies of these documents by directing a request by telephone or mail to Fidelity D & D Bancorp, Inc., Blakely and Drinker Streets, Dunmore, PA 18512; 570-342-8281, or by directing a request by telephone or mail to Landmark Bancorp, Inc., 2 South Main Street, Pittston, PA 18640; 570-602-4522.

 

Landmark and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Landmark in connection with the merger. Information about the directors and executive officers of Landmark and their ownership of Landmark common stock may be obtained by reading the proxy statement/prospectus regarding the merger when it becomes available. Additional information regarding the interests of these participants and other persons who may be deemed participants in the merger may be obtained by reading the proxy statement/prospectus regarding the merger when it becomes available.

A Letter from the President

Dear Shareholders

Landmark Community Bank’s operating results in 2020 reflect the continued progression and strategic execution by our Company during an unprecedented pandemic. The Company’s consistent improvement and performance demonstrates the quality of our disciplined business tactics and the effectiveness of our team in executing the relationship management strategy in our marketplace.

Landmark Community Bank finished 2020 with a net income of $1,346,000 or $0.57 a share compared to $1,058,000 in 2019. Net income for the fourth quarter was $540,000 and increased by $327,000 or a 154% increase compared to $213,000 for the same period last year.

Different than most financial institutions during this time of low interest rates, net interest income of $10.7 million increased $921,000, or 9.4% compared to 2019. The net income for 2020 is illustrated by the following results:

 Income StatementVariance
12/31/202012/31/2019$ Amount%
Net Interest Income$10,714,000$9,793,000$921,0009.4%
Loan Loss Provision* 817,000*(79,000)896,000* INF.
Non‐Interest Expense 9,804,000 10,354,000 (550,000) ‐5.3%
Non‐Interest Income 1,247,000 1,722,000 (475,000)‐27.6%
Income Before Tax 1,340,000 1,240,000 100,000 8.1%
Income Tax (6,000) 182,000 (188,000) ‐103.3%
Net Income $1,346,000$1,058,000$288,00027.2%

* The loan loss provision expense increased $896 thousand compared to last year to increase the reserve as a precaution given the uncertainty surrounding the COVID‐19 pandemic.

 Non‐interest expense Variance
12/31/202012/31/2019$ Amount%
Personnel expense$5,353,000 $5,668,000 ($315,000) ‐5.6%
Occupancy expense*1,622,000 1,357,000265,000* 19.5%
Other operating expenses2,829,000 3,330,000(501,000) ‐15.0%
Non‐interest expense $9,804,000 $10,354,000 (551,000) ‐5.3%

*The increase in occupancy expense was attributable to $199,000 in closing costs for the Clarks Summit branch.

18‐month financial trends
2019
2020
3Q4Q1Q2Q3Q4Q
ROA 0.35% 0.26% 0.27% 0.50% 0.16% 0.59%
ROE3.55% 2.60% 2.70% 5.05% 1.70% 5.99%
Efficiency92.9% 93.8% 89.0% 83.8% 87.5% 71.9%
Cost of Deposits1.20% 1.14% 1.07% 0.75% 0.59% 0.45%

* Financial ratios in 3Q of 2020 are detrimentally skewed due to the $199,000 in additional costs for the 3rd quarter to close the Clarks Summit branch.

Total deposits were $286,593,000 for 2020, an increase of 39% from December 31, 2019. The enormous increase in demand deposits amounted to 35.2%, which is most encouraging. The increase is a direct result of the relationship cross‐selling strategy. It was implemented to restructure the deposit portfolio composition thereby increasing core deposits, reducing the amount of time deposits and, ultimately, reducing cost of funds. The diligent efforts by branch and commercial lending personnel continue to improve Landmark’s deposit base and thus driving down our cost of funds. The results of their efforts are reflected below:

 BalancesVariance
12/31/202012/31/2019$ Amount%
Demand Deposit Accounts$79,406,000 $58,750,000$20,656,000 35.2%
Interest Bearing Accounts132,904,000 121,449,000 11,455,000 9.4%
Time Deposit Accounts74,283,000 98,082,000(23,799,000) ‐24.3%
Total Deposits$286,593,000$278,281,000 $8,312,000 3.0%

Landmark Community Bank ‘s strategic actions have resulted in asset growth in a prudent manner but with a methodical and persistent process. The superior execution of the SBA PPP initiative and cross selling strategy to all who applied resulted in extraordinarily high numbers of new full relationships that included traditional loans, PPP loans and significant core deposits. Our staff’s exceptional capabilities and expeditious service during this pandemic revealed Landmark’s ability to cultivate new profitable business and effectively grow the organization. As validated by our significant trends and the belief of trusted advisors, the strategy for continued growth shall enable Landmark to improve profitability, efficiency and balance sheet strength for increased shareholder value.

The following annual results of each lending department will bear out the success of our strategic plan. The substantial asset growth in mortgage loans and consumer loans rebalances and mitigates Landmark’s concentrated risks that previously rested in the high‐risk commercial portfolio. Due to the disciplined portfolio management and surveillance processes by the commercial lending staff, asset quality continues to be the hallmark of our reputation and future profitability. The quality asset growth in mortgage and consumer loans have produced quality relationships requiring lower reserves and increased core deposits that will continue to provide better overall returns. Landmark’s current healthy pipelines in all lines of business indicate our ability to attain the improved critical mass in our footprint. With the skillful and dedicated lending staff, all Landmark Community Bank lending sectors have realized volume increases with full relationships while improving asset quality metrics:

 BalancesVariance
12/31/202012/31/2019$ Amount%
Commercial Loans$205,681,237$190,091,941$15,589,296 8.2%
Dealer Loans26,941,986 26,709,973232,0130.9%
Mortgage Loans34,063,201 24,154,9229,908,279 41.0%
Consumer Loans13,447,463 6,236,126 7,211,337 115.6%
Leases111,026466,041(355,015) ‐76.2%
Total Loans $280,244,913 $247,659,003 $32,585,910 13.2%

From a credit quality perspective, loans classified as nonaccrual totaled $363,904, or .13% of total loans outstanding on December 31, 2020 compared with $784,395, or .32 % at a year earlier. Total delinquencies greater than 30 days were reduced to .31% on December 31, 2020 compared with .49%, including non‐accruals, a year earlier. As a result of our prudent lending policies and assertive reserve initiatives, the ratio of Loan Loss Reserve to Non‐current loans has reached 10.12, the pinnacle for asset quality cushion. This ratio indicates that Landmark has significant non‐capital cushion available to handle any currently identified lending problems.

Loan Loss Reserve to Non‐Current Loans 5‐year Trend
12/31/1612/31/17 12/31/18 12/31/19 12/31/20
0.34 0.47 0.81 3.80 10.12

It is vital to recognize that Landmark remains well capitalized with $36.2 million in equity, which is an increase of $2.8 million compared to December 2019. The increase is due to a $1.4 million increase in core capital and a $1.4 million increase in accumulated other comprehensive income due to the increased unrealized gains in the investment portfolio.

Thank you once again for the opportunity to provide highlights of our most recent accomplishments and continued progress. Please continue to follow us on Facebook, Instagram, Twitter and our YouTube for all the latest news and events at Landmark. We invite you to take a close look at what we have to offer and discover the difference at Landmark Community Bank.

Please refer to the bank’s website, www.lcbbank.com, for additional metrics and information on the 4th quarter results.

Thank you for your continued support,

Tom
Thomas V Amico
President & CEO

A Message to the Shareholders

Landmark Community Bank’s board of directors has recently decided to suspend dividend payments, according to Sandy Insalaco, Chairman of the Board.

“The nation, our Commonwealth, and our community are currently facing a critical health crisis and economic crisis,” said Mr. Insalaco. “I know we will overcome these challenges together and emerge stronger as a bank and a nation. With that thought we must continue to be proactive and forward looking in our actions.”

Over the past two years, Landmark Community Bank has undergone a strategic transformation that has strengthened its balance sheet and placed Landmark Community Bank in the top tier of most financial measures of security and strength. These results have positioned it well to support its customers.

Thomas V. Amico, President/CEO stated, “To continue this momentum during these times, the board of directors of Landmark Community Bank has taken a bold step to suspend our quarterly dividend payments. This will allow us to retain capital and redirect it into the communities we serve. We believe this action is in line with our commitment to grow and strengthen our bank as we support one another through this pandemic and challenging economic environment.”

Landmark Community Bank was founded in 2001 to provide local, personalized service and a full range of banking products to residents of Northeastern Pennsylvania. Today, Landmark Community Bank has branches in six locations and assets in excess of $325 million.

Landmark Bancorp, Inc. Reports Completion of Private Placement Stock Offering

Pittston, PA (December 19, 2018) Landmark Bancorp, Inc., the parent company of Landmark Community Bank, announced that, as of December 17, 2018, it has completed the private placement offering of approximately $6 million of its common stock. Landmark commenced the common stock offering on October 1, 2018, at $15.44 per share. All shares of common stock offered in the private placement were sold out.

Thomas V. Amico, President and Chief Executive Officer of Landmark, stated, “We are very pleased with the overwhelming demand we experienced for our common stock offering and the validation of our community bank business model. The fact that all of the shares of common stock were sold is a testament to the community’s faith in our Board, management team, business plan and the long-term goals of the bank.”

The net proceeds, after deducting offering expense, will be used for general corporate purposes including, but not limited to, continuing to meet regulatory capital requirements, increasing the regulatory lending ability of the bank, and redeeming the 1,500 shares of issued and outstanding Series A Preferred Stock for $1.5 million upon receipt of regulatory approval.

“On behalf of Landmark, I want to thank everyone who purchased common stock in the private placement, which includes both longtime shareholders and new investors,” Mr. Amico continued. “The new capital will assist us to execute on our strategic rebranding and provide us with a solid foundation to grow.”

Computershare is the transfer agent and registrar for Landmark Community Bank and maintains shareholder records for the company.

Please contact Computershare at:

Computershare
C/O Shareholder Services
P.O. Box 505000
Louisville, KY 40233-5000

By Overnight Delivery
462 South 4th Street
Suite 1600
Louisville, KY 40202

PH: 800-368-5948
Website

Your account may be managed online via Investor Relations at info@rtco.com, a cost-free web tool for shareholders, where you will be able to view your account details, update your account information and process various transactions.

A Warning About Forward-Looking Statements

In addition to historical information, this document may contain forward-looking statements. Examples of forward-looking statements include, but are not limited to, (a) projections or statements regarding future earnings, expenses, net interest income, other income, earnings or loss per share, asset mix and quality, growth prospects, capital structure, and other financial terms, (b) statements of plans and objectives of management or the Board of Directors, and (c) statements of assumptions, such as economic conditions in the Corporation’s market areas. Such forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “intends”, “will”, “should”, “anticipates”, or the negative of any of the foregoing or other variations thereon or comparable terminology, or by discussion of strategy. Forward-looking statements are subject to certain risks and uncertainties such as local economic conditions, competitive factors, and regulatory limitations. Actual results may differ materially from those projected in the forward-looking statements. We caution readers not to place undue reliance on these forward-looking statements. They only reflect management’s analysis as of this date. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: the effects of new laws and regulations, including the impact of the Tax Cut and Jobs Act and Dodd-Frank Wall Street Reform and Consumer Protection Act; 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 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; technological changes; the interruption or breach in security of our information systems 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; ineffectiveness of the business strategy due to changes in current or future market conditions; the effects of economic deterioration on current customers, specifically the effect of the economy on loan customers’ ability to repay loans; the effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; interest rate movements; difficulties in integrating distinct business operations, including information technology difficulties; disruption from the transaction making it more difficult to maintain relationships with customers and employees, and challenges in establishing and maintaining operations in new markets; volatilities in the securities markets; slow economic conditions; and acts of war or terrorism. The Corporation does not revise or update these forward-looking statements to reflect events or changed circumstances.