Acquisition	12 Months Ended
Dec. 31, 2021
Acquisition [Abstract]
Acquisition	20.ACQUISITIONOn July 1, 2021, the Company completed its previously announced acquisition of Landmark. Landmark was a one-bank holding company organized under the laws of the Commonwealth of Pennsylvania and was headquartered in Pittston, PA. Its wholly owned subsidiary, Landmark Community Bank, was an independent community bank chartered under the laws of the Commonwealth of Pennsylvania. Landmark Community Bank conducted full-service commercial banking services through five bank centers located in Lackawanna and Luzerne Counties, Pennsylvania. The acquisition expanded Fidelity Deposit and Discount Bank’s full-service footprint in Luzerne County, Pennsylvania. The Company transacted the merger to complement the Company’s existing operations, while consistent with the Company’s strategic plan of enhancing long-term shareholder value. The fair value of total assets acquired as a result of the merger totaled $375.5 million (net of cash consideration), loans totaled $298.9 million and deposits totaled $308.5 million. Goodwill recorded in the merger was $12.6 million. In accordance with the terms of the Reorganization Agreement, on July 1, 2021 each share of Landmark common stock was converted into the right to receive 0.272 shares of the Company’s common stock and $3.26 in cash. As a result of the merger, the Company issued 647,990 shares of its common stock, valued at $35.1 million, and $7.8 million in cash based upon $54.10, the determined market price of the Company’s common stock in accordance with the Reorganization Agreement. The results of the combined entity’s operations are included in the Company’s Consolidated Financial Statements from the date of acquisition. The acquisition of Landmark was accounted for as a business combination using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration paid were recorded at estimated fair values on the acquisition date. Effective July 1, 2021, in connection with the merger and pursuant to the terms of the Reorganization Agreement, Paul C. Woelkers was appointed as a Class C Director of Fidelity’s Board of Directors. Mr. Woelkers was also appointed as a Director of Fidelity Bank’s Board of Directors.The following table summarizes the consideration paid for Landmark and the fair value of assets acquired, and liabilities assumed as of the acquisition date: Purchase Price Consideration in Common Stock Landmark shares settled for stock 2,382,695Exchange ratio 0.272Total FDBC shares issued 647,990Value assigned to FDBC common share (6/30/2021 closing price) $ 54.10 Purchase price assigned to Landmark common shares exchanged for FDBC common shares $ 35,056,259 Purchase Price Consideration - Cash for Common Stock Landmark shares exchanged for cash, excluding fractional shares 2,382,695Cash consideration (per Landmark share) $ 3.26Cash portion of purchase price $ 7,767,586 Cash portion of purchase price (cash paid fractional shares) $ 5,559 Cash for outstanding Landmark stock options $ 69,250 Total consideration paid $ 42,898,654 Allocation of Purchase PriceIn thousands Total Purchase Price $ 42,899 Estimated Fair Value of Assets Acquired Cash and cash equivalents 4,090 Investment securities 49,430 Loans 298,860 Restricted investments in bank stock 1,186 Premises and equipment 3,405 Lease property under finance leases 1,188 Core deposit intangible asset 597 Other real estate owned 488 Other assets 11,629 Total assets acquired 370,873 Estimated Fair Value of Liabilities Assumed Non-interest bearing deposits 100,472 Interest bearing deposits 208,057 Short-term borrowings 2,224 FHLB borrowings 4,602 Secured borrowings 20,619 Finance lease obligation 1,188 Other liabilities 3,387 Total liabilities assumed 340,549 Net Assets Acquired 30,324Goodwill Recorded in Acquisition $ 12,575 Pursuant to the accounting requirements, the Company assigned a fair value to the assets acquired and liabilities assumed of Landmark. ASC 820 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The assets acquired and liabilities assumed in the acquisition of Landmark were recorded at their estimated fair values based on management’s best estimates using information available at the date of the acquisition and are subject to adjustment for up to one year after the closing date of the acquisition. While the fair values are not expected to be materially different from the estimates, any material adjustments to the estimates will be reflected, retroactively, as of the date of the acquisition. The items most susceptible to adjustment are the fair value adjustments on loans, core deposit intangible and the deferred income tax assets resulting from the acquisition. Fair values of the major categories of assets acquired and liabilities assumed were determined as follows:Investment securities available-for-sale The estimated fair values of the investment securities available for sale, primarily comprised of U.S. Government agency mortgage-backed securities, U.S. government agencies and municipal bonds, were determined using Level 1 and Level 2 inputs in the fair value hierarchy. The fair values were determined using executable market bids or independent pricing services. The Company’s independent pricing service utilized matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific security but rather relying on the security’s relationship to other benchmark quoted prices. Management reviewed the data and assumptions used in pricing the securities. LoansAcquired loans (performing and non-performing) are initially recorded at their acquisition-date fair values using Level 3 inputs. Fair values are based on a discounted cash flow methodology that involves assumptions and judgments as to credit risk, expected lifetime losses, environmental factors, collateral values, discount rates, expected payments and expected prepayments. Specifically, the Company has prepared three separate loan fair value adjustments that it believed a market participant might employ in estimating the entire fair value adjustment necessary under ASC 820-10 for the acquired loan portfolio. The three-separate fair valuation methodologies employed are: 1) an interest rate loan fair value adjustment, 2) a general credit fair value adjustment, and 3) a specific credit fair value adjustment for purchased credit impaired loans subject to ASC 310-30 procedures. The acquired loans were recorded at fair value at the acquisition date without carryover of Landmark’s previously established allowance for loan losses. The fair value of the financial assets acquired included loans receivable with a gross amortized cost basis of $309.8 million. The table below illustrates the fair value adjustments made to the amortized cost basis in order to present the fair value of the loans acquired. The credit adjustment on purchased credit impaired loans is derived in accordance with ASC 310-30 and represents the portion of the loan balances that has been deemed uncollectible based on the Company’s expectations of future cash flows for each respective loan. Dollars in thousands Gross amortized cost basis at June 30, 2021 $ 309,767Interest rate fair value adjustment on pools of homogeneous loans (1,855)Credit fair value adjustment on pools of homogeneous loans (7,915)Credit fair value adjustment on purchased credit impaired loans (1,137)Fair value of acquired loans at June 30, 2021 $ 298,860 For loans acquired without evidence of credit quality deterioration, the Company prepared the interest rate loan fair value and credit fair value adjustments. Loans were grouped into homogeneous pools by characteristics such as loan type, term, collateral, and rate. Market rates for similar loans were obtained from various internal and external data sources and reviewed by management for reasonableness. The average of these rates was used as the fair value interest rate a market participant would utilize. A present value approach was utilized to calculate the interest rate fair value discount of $1.9 million. Additionally, for loans acquired without credit deterioration, a credit fair value adjustment was calculated using a two-part credit fair value analysis: 1) expected lifetime credit migration losses; and 2) estimated fair value adjustment for certain qualitative factors. The expected lifetime losses were calculated using historical losses observed by the Company, Landmark and peer banks. The Company also estimated an environmental factor to apply to each loan type. The environmental factor represents the potential discount which may arise due to general credit and economic factors. A credit fair value discount of $7.9 million was determined. Both the interest rate and credit fair value adjustments relate to loans acquired with evidence of credit quality deterioration will be substantially recognized as interest income on a level yield amortization method over the expected life of the loans.‎ The following table presents the acquired purchased credit impaired loans receivable at the acquisition date: Dollars in thousands Contractual principal and interest at acquisition $ 5,306Non-accretable difference (1,691)Expected cash flows at acquisition 3,615Accretable yield (588)Fair value of purchased impaired loans $ 3,027 Premises and EquipmentThe Company assumed leases on 2 branch facilities of Landmark. The Company compared the lease contract obligations to comparable market rental rates determined by third-party licensed appraisers. The Company believed that the leased contract rates were in a reasonable range of market rental rates and concluded that no fair market value adjustment related to leasehold interest was necessary. The fair value of Landmark’s premises, including land, buildings and improvements, was determined based upon independent third-party appraisals performed by licensed appraisers or sales agreements.Core Deposit IntangibleThe fair value of the core deposit intangible was determined based on a discounted cash flow (present value) analysis using a discount rate commensurate with market participants. To calculate cash flows, deposit account servicing costs (net of deposit fee income) and interest expense on deposits were compared to the higher cost of alternative funding sources available through national brokered CD offering rates and FHLB advance rates. The projected cash flows were developed using projected deposit attrition rates based on the average rate experienced by both institutions. The core deposit intangible will be amortized over ten years using the sum-of-years digits method.Time DepositsThe fair value adjustment for time deposits represents a discount from the value of the contractual repayments of fixed maturity deposits using prevailing market interest rates for similar-term time deposits. The time deposit premium is being amortized into income on a level yield amortization method over the contractual life of the deposits. Secured BorrowingsThe Company identified 19 sold participations acquired from Landmark that did not meet the criteria for sales treatment under ASC 860-10-40 and should be recorded as obligations from secured borrowing arrangements. The Company has estimated the fair value of these obligations using an income approach based on the expected cash flows method on a pooled basis using Level 3 assumptions.FHLB Borrowings The Company assumed FHLB borrowings in connection with the merger. The fair value of FHLB Borrowings was determined by using FHLB prepayment penalty as a proxy for the fair value adjustment. The Company decided to pay off the borrowing post acquisition date therefore no amortization is warranted.Supplemental Pro Forma Financial InformationThe following table presents certain unaudited pro forma financial information for illustrative purposes only, for the twelve months ended December 31, 2021 and 2020, respectively, as if Landmark had been acquired on January 1, 2020. This unaudited pro forma information combines the historical results of Landmark with the Company’s consolidated historical results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the respective periods. The pro forma information is not indicative of what would have occurred had the acquisition occurred as of the beginning of the year prior to the acquisition. The unaudited pro forma information does not consider any changes to the provision expense resulting from recording loan assets at fair value, merger expenses, cost savings or business synergies. As a result, actual amounts would have differed from the unaudited pro forma information presented and the differences could be significant.‎ UnauditedTwelve months ended December 31,(Dollars in thousands)2021 2020Net interest income$ 68,970 $ 57,531Other income 18,959 15,978Total net interest income and other income$ 87,929 $ 73,509 Net income 29,080 18,402 Basic earnings per common share$5.15 $3.52Diluted earnings per common share$5.11 $3.50 Merger-related expensesFor year ended December 31, 2021, the Company incurred $3.0 million in merger-related expenses related to the merger with Landmark, primarily consisting of data processing, salaries and employee benefits, and professional fee expenses. For the year ended December 31, 2020, the Company incurred merger-related expenses related to the merger with MNB totaling $2.5 million, primarily consisting of professional fees, salaries and employee benefits and data processing fees.

Acquisition

12 Months Ended

Dec. 31, 2021

20.ACQUISITIONOn July 1, 2021, the Company completed its previously announced acquisition of Landmark. Landmark was a one-bank holding company organized under the laws of the Commonwealth of Pennsylvania and was headquartered in Pittston, PA. Its wholly owned subsidiary, Landmark Community Bank, was an independent community bank chartered under the laws of the Commonwealth of Pennsylvania. Landmark Community Bank conducted full-service commercial banking services through five bank centers located in Lackawanna and Luzerne Counties, Pennsylvania. The acquisition expanded Fidelity Deposit and Discount Bank’s full-service footprint in Luzerne County, Pennsylvania. The Company transacted the merger to complement the Company’s existing operations, while consistent with the Company’s strategic plan of enhancing long-term shareholder value. The fair value of total assets acquired as a result of the merger totaled $375.5 million (net of cash consideration), loans totaled $298.9 million and deposits totaled $308.5 million. Goodwill recorded in the merger was $12.6 million. In accordance with the terms of the Reorganization Agreement, on July 1, 2021 each share of Landmark common stock was converted into the right to receive 0.272 shares of the Company’s common stock and $3.26 in cash. As a result of the merger, the Company issued 647,990 shares of its common stock, valued at $35.1 million, and $7.8 million in cash based upon $54.10, the determined market price of the Company’s common stock in accordance with the Reorganization Agreement. The results of the combined entity’s operations are included in the Company’s Consolidated Financial Statements from the date of acquisition. The acquisition of Landmark was accounted for as a business combination using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration paid were recorded at estimated fair values on the acquisition date. Effective July 1, 2021, in connection with the merger and pursuant to the terms of the Reorganization Agreement, Paul C. Woelkers was appointed as a Class C Director of Fidelity’s Board of Directors. Mr. Woelkers was also appointed as a Director of Fidelity Bank’s Board of Directors.The following table summarizes the consideration paid for Landmark and the fair value of assets acquired, and liabilities assumed as of the acquisition date: Purchase Price Consideration in Common Stock Landmark shares settled for stock 2,382,695Exchange ratio 0.272Total FDBC shares issued 647,990Value assigned to FDBC common share (6/30/2021 closing price) $ 54.10 Purchase price assigned to Landmark common shares exchanged for FDBC common shares $ 35,056,259 Purchase Price Consideration - Cash for Common Stock Landmark shares exchanged for cash, excluding fractional shares 2,382,695Cash consideration (per Landmark share) $ 3.26Cash portion of purchase price $ 7,767,586 Cash portion of purchase price (cash paid fractional shares) $ 5,559 Cash for outstanding Landmark stock options $ 69,250 Total consideration paid $ 42,898,654 Allocation of Purchase PriceIn thousands Total Purchase Price $ 42,899 Estimated Fair Value of Assets Acquired Cash and cash equivalents 4,090 Investment securities 49,430 Loans 298,860 Restricted investments in bank stock 1,186 Premises and equipment 3,405 Lease property under finance leases 1,188 Core deposit intangible asset 597 Other real estate owned 488 Other assets 11,629 Total assets acquired 370,873 Estimated Fair Value of Liabilities Assumed Non-interest bearing deposits 100,472 Interest bearing deposits 208,057 Short-term borrowings 2,224 FHLB borrowings 4,602 Secured borrowings 20,619 Finance lease obligation 1,188 Other liabilities 3,387 Total liabilities assumed 340,549 Net Assets Acquired 30,324Goodwill Recorded in Acquisition $ 12,575 Pursuant to the accounting requirements, the Company assigned a fair value to the assets acquired and liabilities assumed of Landmark. ASC 820 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The assets acquired and liabilities assumed in the acquisition of Landmark were recorded at their estimated fair values based on management’s best estimates using information available at the date of the acquisition and are subject to adjustment for up to one year after the closing date of the acquisition. While the fair values are not expected to be materially different from the estimates, any material adjustments to the estimates will be reflected, retroactively, as of the date of the acquisition. The items most susceptible to adjustment are the fair value adjustments on loans, core deposit intangible and the deferred income tax assets resulting from the acquisition. Fair values of the major categories of assets acquired and liabilities assumed were determined as follows:Investment securities available-for-sale The estimated fair values of the investment securities available for sale, primarily comprised of U.S. Government agency mortgage-backed securities, U.S. government agencies and municipal bonds, were determined using Level 1 and Level 2 inputs in the fair value hierarchy. The fair values were determined using executable market bids or independent pricing services. The Company’s independent pricing service utilized matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific security but rather relying on the security’s relationship to other benchmark quoted prices. Management reviewed the data and assumptions used in pricing the securities. LoansAcquired loans (performing and non-performing) are initially recorded at their acquisition-date fair values using Level 3 inputs. Fair values are based on a discounted cash flow methodology that involves assumptions and judgments as to credit risk, expected lifetime losses, environmental factors, collateral values, discount rates, expected payments and expected prepayments. Specifically, the Company has prepared three separate loan fair value adjustments that it believed a market participant might employ in estimating the entire fair value adjustment necessary under ASC 820-10 for the acquired loan portfolio. The three-separate fair valuation methodologies employed are: 1) an interest rate loan fair value adjustment, 2) a general credit fair value adjustment, and 3) a specific credit fair value adjustment for purchased credit impaired loans subject to ASC 310-30 procedures. The acquired loans were recorded at fair value at the acquisition date without carryover of Landmark’s previously established allowance for loan losses. The fair value of the financial assets acquired included loans receivable with a gross amortized cost basis of $309.8 million. The table below illustrates the fair value adjustments made to the amortized cost basis in order to present the fair value of the loans acquired. The credit adjustment on purchased credit impaired loans is derived in accordance with ASC 310-30 and represents the portion of the loan balances that has been deemed uncollectible based on the Company’s expectations of future cash flows for each respective loan. Dollars in thousands Gross amortized cost basis at June 30, 2021 $ 309,767Interest rate fair value adjustment on pools of homogeneous loans (1,855)Credit fair value adjustment on pools of homogeneous loans (7,915)Credit fair value adjustment on purchased credit impaired loans (1,137)Fair value of acquired loans at June 30, 2021 $ 298,860 For loans acquired without evidence of credit quality deterioration, the Company prepared the interest rate loan fair value and credit fair value adjustments. Loans were grouped into homogeneous pools by characteristics such as loan type, term, collateral, and rate. Market rates for similar loans were obtained from various internal and external data sources and reviewed by management for reasonableness. The average of these rates was used as the fair value interest rate a market participant would utilize. A present value approach was utilized to calculate the interest rate fair value discount of $1.9 million. Additionally, for loans acquired without credit deterioration, a credit fair value adjustment was calculated using a two-part credit fair value analysis: 1) expected lifetime credit migration losses; and 2) estimated fair value adjustment for certain qualitative factors. The expected lifetime losses were calculated using historical losses observed by the Company, Landmark and peer banks. The Company also estimated an environmental factor to apply to each loan type. The environmental factor represents the potential discount which may arise due to general credit and economic factors. A credit fair value discount of $7.9 million was determined. Both the interest rate and credit fair value adjustments relate to loans acquired with evidence of credit quality deterioration will be substantially recognized as interest income on a level yield amortization method over the expected life of the loans.‎ The following table presents the acquired purchased credit impaired loans receivable at the acquisition date: Dollars in thousands Contractual principal and interest at acquisition $ 5,306Non-accretable difference (1,691)Expected cash flows at acquisition 3,615Accretable yield (588)Fair value of purchased impaired loans $ 3,027 Premises and EquipmentThe Company assumed leases on 2 branch facilities of Landmark. The Company compared the lease contract obligations to comparable market rental rates determined by third-party licensed appraisers. The Company believed that the leased contract rates were in a reasonable range of market rental rates and concluded that no fair market value adjustment related to leasehold interest was necessary. The fair value of Landmark’s premises, including land, buildings and improvements, was determined based upon independent third-party appraisals performed by licensed appraisers or sales agreements.Core Deposit IntangibleThe fair value of the core deposit intangible was determined based on a discounted cash flow (present value) analysis using a discount rate commensurate with market participants. To calculate cash flows, deposit account servicing costs (net of deposit fee income) and interest expense on deposits were compared to the higher cost of alternative funding sources available through national brokered CD offering rates and FHLB advance rates. The projected cash flows were developed using projected deposit attrition rates based on the average rate experienced by both institutions. The core deposit intangible will be amortized over ten years using the sum-of-years digits method.Time DepositsThe fair value adjustment for time deposits represents a discount from the value of the contractual repayments of fixed maturity deposits using prevailing market interest rates for similar-term time deposits. The time deposit premium is being amortized into income on a level yield amortization method over the contractual life of the deposits. Secured BorrowingsThe Company identified 19 sold participations acquired from Landmark that did not meet the criteria for sales treatment under ASC 860-10-40 and should be recorded as obligations from secured borrowing arrangements. The Company has estimated the fair value of these obligations using an income approach based on the expected cash flows method on a pooled basis using Level 3 assumptions.FHLB Borrowings The Company assumed FHLB borrowings in connection with the merger. The fair value of FHLB Borrowings was determined by using FHLB prepayment penalty as a proxy for the fair value adjustment. The Company decided to pay off the borrowing post acquisition date therefore no amortization is warranted.Supplemental Pro Forma Financial InformationThe following table presents certain unaudited pro forma financial information for illustrative purposes only, for the twelve months ended December 31, 2021 and 2020, respectively, as if Landmark had been acquired on January 1, 2020. This unaudited pro forma information combines the historical results of Landmark with the Company’s consolidated historical results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the respective periods. The pro forma information is not indicative of what would have occurred had the acquisition occurred as of the beginning of the year prior to the acquisition. The unaudited pro forma information does not consider any changes to the provision expense resulting from recording loan assets at fair value, merger expenses, cost savings or business synergies. As a result, actual amounts would have differed from the unaudited pro forma information presented and the differences could be significant.‎ UnauditedTwelve months ended December 31,(Dollars in thousands)2021 2020Net interest income$ 68,970 $ 57,531Other income 18,959 15,978Total net interest income and other income$ 87,929 $ 73,509 Net income 29,080 18,402 Basic earnings per common share$5.15 $3.52Diluted earnings per common share$5.11 $3.50 Merger-related expensesFor year ended December 31, 2021, the Company incurred $3.0 million in merger-related expenses related to the merger with Landmark, primarily consisting of data processing, salaries and employee benefits, and professional fee expenses. For the year ended December 31, 2020, the Company incurred merger-related expenses related to the merger with MNB totaling $2.5 million, primarily consisting of professional fees, salaries and employee benefits and data processing fees.