Fidelity D & D Bancorp, Inc. Third Quarter 2007 Financial Results

DUNMORE, Pa., Oct. 17 /PRNewswire-FirstCall/ -- Fidelity D & D Bancorp, Inc. (OTC:FDBC) (BULLETIN BOARD: FDBC) , parent company of The Fidelity Deposit and Discount Bank, announced net income for the quarter ended September 30, 2007 of $1,178,000, a 14% increase compared to $1,030,000 for the same quarter of 2006. Earnings per share on a fully diluted basis for the quarter totaled $0.57, up from $0.51 for the prior year period. Net income for the nine months ended September 30, 2007 was $3,381,000, a 13% increase compared to net income of $3,000,000 for the same 2006 period. Earnings per share were $1.64 and $1.47 for the nine months ended September 30, 2007 and 2006, respectively. Net interest income increased to $4,422,000 for the quarter ended September 30, 2007 from $4,313,000 recorded during the same quarter of 2006. Growth in the security and loan portfolios produced more interest income, which was partially offset by rising interest costs, resulting in higher net interest income earned for the third quarter of 2007. This improved the net interest margin to 3.31% for the third quarter of 2007 from 3.29% for same 2006 period. Net interest income increased to $13,049,000 for the nine months ended September 30, 2007 from $12,809,000 recorded during the same quarter of 2006. Net interest margin was 3.34% during the nine months of 2007, up four basis points from 3.30% during the same 2006 period. A credit to provision for loan loss was required during the quarter ended September 30, 2007 due to improved credit quality of classified loans. The third quarter and the first nine months of 2007 was a $60,000 credit compared to charges of $75,000 and $325,000 in the same 2006 quarter and nine month period, respectively. The allowance for loan losses was 1.17% of total loans at September 30, 2007, down from 1.41% at September 30, 2006. Steven C. Ackmann, President and CEO stated, "We are pleased with the continued increase in quarterly earnings even in the face of a challenging rate and credit environment for banks in general. We are further encouraged by the 7% increase in deposits since the beginning of the year. Those increases came from enhanced products; strong selling efforts by our dedicated core of personal bankers and impressive growth in our popular, newly relocated Greenridge office. This quarter also saw us begin construction of our new West Scranton Branch; look for it to open late in the first quarter of 2008." Total other income recorded for the quarter ended September 30, 2007 was $1,309,000, compared with $1,136,000 for the same quarter in 2006. Growth in deposit service charges, other fee income and gains recorded from loan sales during in the third quarter of 2007 produced the $172,000 increase in other income compared to the third quarter of 2006. Total other income for the nine months ended September 30, 2007 was $3,852,000, up $503,000 compared to $3,349,000 for the same period in 2006. Total other operating expenses increased from $3,996,000 to $4,189,000 for the quarters ending September 30, 2006 and 2007, respectively. The operating expense increase resulted primarily from salary and incentive expenses plus more occupancy, donation and ATM expenses occurring during in the third quarter of 2007 as compared to 2006. Total other operating expenses increased from $11,867,000 for the nine months ending September 30, 2006 to $12,390,000 for 2007. The Company's assets grew $26,783,000, or 5%, to total $589,101,000 at September 30, 2007 from $562,318,000 at December 31, 2006. Fidelity D & D Bancorp, Inc. serves Lackawanna and Luzerne Counties through The Fidelity Deposit and Discount Bank's 12 community banking offices and 20 ATM locations. For more information please visit our investor relations web site located at http://www.the-fidelity.com/. This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various factors. These factors include the possibility that increased demand or prices for the company's financial services and products may not occur, changing economic, interest rate and competitive conditions, technological developments and other risks and uncertainties, including those detailed in the company's filings with the Securities and Exchange Commission. FIDELITY D & D BANCORP, INC. Unaudited Condensed Consolidated Balance Sheets At Period End: Sep. 30, 2007 Jun. 30, 2007 Mar. 31, 2007 Assets Total cash and cash equivalents $13,371,112 $12,220,533 $14,435,738 Investment securities 121,896,653 107,964,486 101,291,577 Federal Home Loan Bank Stock 3,558,300 4,151,900 3,598,600 Loans and leases 426,163,776 425,652,831 422,955,523 Allowance for loan losses (4,990,855) (5,294,537) (5,359,758) Premises and equipment, net 13,306,479 13,331,402 10,941,355 Life insurance cash surrender value 8,408,987 8,331,225 8,254,777 Other assets 7,386,687 7,134,628 8,508,130 Total assets $589,101,139 $573,492,468 $564,625,942 Liabilities Non-interest-bearing deposits $70,544,329 $72,067,616 $71,623,735 Interest-bearing deposits 368,512,228 349,263,741 342,443,261 Total deposits 439,056,557 421,331,357 414,066,996 Short-term borrowings 28,579,498 29,601,083 31,607,966 Long-term debt 62,917,875 66,125,522 62,331,630 Other liabilities 4,658,726 4,235,491 3,985,911 Total liabilities 535,212,656 521,293,453 511,992,503 Shareholders' equity 53,888,483 52,199,015 52,633,439 Total liabilities and shareholders' equity $589,101,139 $573,492,468 $564,625,942 Average Quarterly Balances: Sep. 30, 2007 Jun. 30, 2007 Mar. 31, 2007 Assets Total cash and cash equivalents $10,793,137 $11,362,306 $12,185,856 Investment securities 118,204,518 112,993,078 108,698,773 Loans and leases, net 420,402,304 415,200,287 419,942,066 Premises and equipment, net 13,311,760 10,994,719 11,194,541 Other assets 15,406,872 16,905,957 14,415,628 Total assets $578,118,591 $567,456,347 $566,436,864 Liabilities Non-interest-bearing deposits $72,383,671 $70,718,373 $69,737,257 Interest-bearing deposits 359,341,338 344,421,824 354,901,749 Total deposits 431,725,009 415,140,197 424,639,006 Short-term borrowings and long-term debt 88,544,109 95,203,717 85,273,730 Other liabilities 4,723,440 4,208,926 4,341,031 Total liabilities 524,992,558 514,552,840 514,253,767 Shareholders' equity 53,126,033 52,903,507 52,183,097 Total liabilities and shareholders' equity $578,118,591 $567,456,347 $566,436,864 At Period End: Dec. 31, 2006 Sep. 30, 2006 Assets Total cash and cash equivalents $13,800,848 $20,832,779 Investment securities 100,410,736 101,740,346 Federal Home Loan Bank Stock 3,795,100 3,259,400 Loans and leases 422,765,351 415,915,591 Allowance for loan losses (5,444,303) (5,843,538) Premises and equipment, net 11,324,465 11,296,696 Life insurance cash surrender value 8,177,961 8,105,171 Other assets 7,487,830 7,534,038 Total assets $562,317,988 $562,840,483 Liabilities Non-interest-bearing deposits $73,741,975 $71,548,817 Interest-bearing deposits 336,592,620 348,180,970 Total deposits 410,334,595 419,729,787 Short-term borrowings 33,656,150 22,826,739 Long-term debt 62,536,210 65,590,062 Other liabilities 4,179,170 3,730,970 Total liabilities 510,706,125 511,877,558 Shareholders' equity 51,611,863 50,962,925 Total liabilities and shareholders' equity $562,317,988 $562,840,483 Average Quarterly Balances: Dec. 31, 2006 Sep. 30, 2006 Assets Total cash and cash equivalents $10,970,802 $10,133,961 Investment securities 114,670,680 116,520,987 Loans and leases, net 412,624,062 414,380,326 Premises and equipment, net 11,260,563 11,480,499 Other assets 13,908,846 12,321,122 Total assets $563,434,953 $564,836,895 Liabilities Non-interest-bearing deposits $70,975,409 $68,170,366 Interest-bearing deposits 344,024,072 349,113,993 Total deposits 414,999,481 417,284,359 Short-term borrowings and long- term debt 92,572,901 93,953,798 Other liabilities 4,501,801 3,968,526 Total liabilities 512,074,183 515,206,683 Shareholders' equity 51,360,770 49,630,212 Total liabilities and shareholders' equity $563,434,953 $564,836,895 FIDELITY D & D BANCORP, INC. Unaudited Condensed Consolidated Statements of Income Three Months Ended Nine Months Ended Sep. 30, Sep. 30, Sep. 30, Sep. 30, 2007 2006 2007 2006 Interest income Loans and leases $7,345,777 $7,226,814 $21,890,563 $20,858,722 Securities and other 1,546,569 1,367,752 4,317,977 4,000,449 Total interest income 8,892,346 8,594,566 26,208,540 24,859,171 Interest expense Deposits 3,420,693 3,132,402 9,977,394 8,279,425 Borrowings and debt 1,049,298 1,148,667 3,182,045 3,770,516 Total interest expense 4,469,991 4,281,069 13,159,439 12,049,941 Net interest income 4,422,355 4,313,497 13,049,101 12,809,230 Provision for loan losses (60,000) 75,000 (60,000) 325,000 Other income 1,308,761 1,136,275 3,851,538 3,349,052 Other expenses 4,189,171 3,995,764 12,389,767 11,866,663 Provision for income taxes 424,023 349,032 1,189,866 966,392 Net income $1,177,922 $1,029,976 $3,381,006 $3,000,227 Three Months Ended Sep. 30, Jun. 30, Mar. 31, 2007 2007 2007 Interest income Loans and leases $7,345,777 $7,260,240 $7,284,546 Securities and other 1,546,569 1,424,138 1,347,270 Total interest income 8,892,346 8,684,378 8,631,816 Interest expense Deposits 3,420,693 3,222,678 3,334,023 Borrowings and debt 1,049,298 1,139,144 993,603 Total interest expense 4,469,991 4,361,822 4,327,626 Net interest income 4,422,355 4,322,556 4,304,190 Provision for loan losses (60,000) - - Other income 1,308,761 1,329,114 1,213,663 Other expenses 4,189,171 4,087,553 4,113,043 Provision for income taxes 424,023 405,384 360,459 Net income $1,177,922 $1,158,733 $1,044,351 Three Months Ended Dec. 31, 2006 Sep. 30, 2006 Interest income Loans and leases $7,268,584 $7,226,814 Securities and other 1,401,955 1,367,752 Total interest income 8,670,539 8,594,566 Interest expense Deposits 3,213,402 3,132,402 Borrowings and debt 1,097,766 1,148,667 Total interest expense 4,311,168 4,281,069 Net interest income 4,359,371 4,313,497 Provision for loan losses - 75,000 Other income 1,173,086 1,136,275 Other expenses 4,011,713 3,995,764 Provision for income taxes 395,688 349,032 Net income $1,125,056 $1,029,976 FIDELITY D & D BANCORP, INC. Selected Financial Ratios and Other Data Three Months Ended Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, 2007 2007 2007 2006 2006 Selected returns and financial ratios Diluted earnings per share $0.57 $0.56 $0.51 $0.54 $0.51 Dividends per share $0.24 $0.22 $0.22 $0.22 $0.22 Yield on interest-earning assets (FTE) 6.56% 6.61% 6.65% 6.55% 6.45% Cost of interest-bearing liabilities 3.96% 3.98% 3.99% 3.92% 3.83% Net interest spread 2.60% 2.63% 2.66% 2.63% 2.62% Net interest margin 3.31% 3.34% 3.36% 3.34% 3.29% Return on average assets 0.81% 0.82% 0.75% 0.79% 0.72% Return on average equity 8.80% 8.79% 8.12% 8.69% 8.18% Efficiency ratio 72.05% 71.16% 72.86% 71.31% 71.85% Expense ratio 2.01% 1.98% 2.11% 2.03% 2.03% Nine Months Ended Sep. 30, 2007 Sep. 30, 2006 Diluted earnings per share $1.64 $1.47 Dividends per share $0.68 $0.66 Yield on interest-earning assets (FTE) 6.60% 6.29% Cost of interest-bearing liabilities 3.98% 3.62% Net interest spread 2.62% 2.67% Net interest margin 3.34% 3.30% Return on average assets 0.79% 0.71% Return on average equity 8.57% 8.12% Efficiency ratio 72.01% 71.80% Expense ratio 2.02% 2.03% Other data Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, 2007 2007 2007 2006 2006 Book value per share $26.00 $25.25 $25.51 $25.09 $24.82 Equity to assets 9.15% 9.10% 9.32% 9.18% 9.05% Allowance for loan losses to: Total loans 1.17% 1.24% 1.27% 1.29% 1.41% Non-accrual loans 1.07x 1.21x 1.69x 1.62x 1.43x Non-accrual loans to net loans 1.10% 1.04% 0.76% 0.80% 1.00% Non-performing assets to total assets 0.81% 0.78% 0.67% 0.65% 0.93% DATASOURCE: Fidelity D&D Bancorp, Inc. CONTACT: Steven C. Ackmann, President and Chief Executive Officer, +1-570-346-4156, or Salvatore R. DeFrancesco, Jr., Treasurer and Chief Financial Officer, +1-570-504-8000, both of Fidelity D&D Bancorp, Inc. Web site: http://www.the-fidelity.com/